Thursday September 7 2017, Daily News Digest

robo-advisors

News Comments Today’s main news: Square plans to apply for an ILC banking license. Laplanche boosts volumes at Upgrade. SoFi CEO pulls out of Goldman fintech conference due to recent sexual harassment allegations. RealtyMogul launches MogulREIT II. Today’s main analysis: Why broker-dealer robo-advisors miss the point. Today’s thought-provoking articles: Why broker-dealer robo-advisors miss the point. RateSetter says even a millionaire couldn’t […]

robo-advisors

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News Summary

United States

Square to apply for industrial bank, inflaming ILC debate (American Banker), Rated: AAA

Payment processor Square is seeking an industrial loan company, according to several sources familiar with the matter, further sparking debate over whether fintech companies should be allowed to use the controversial charter.

“ICBA’s feeling about Square applying for an ILC is the same about SoFi,” said Camden Fine, the president and CEO of the Independent Community Bankers of America. “If these entities want to be banks, they should apply for banking charters and come under full and unified banking supervision.”

Square’s main purpose for the charter will be to extend its small-business lending business, the spokesperson said. Though it also intends to take deposits, which would provide some amount of funding for its on-balance-sheet loans, the lion share of the company’s loans would still be sold off to third parties.

Square also felt the ILC charter was best suited to its structure, as the company owns a point-of-sales hardware appliance business and even a food delivery service called Caviar.

Ousted Lending Club chief boosts volumes at new venture (Financial Times), Rated: AAA

Renaud Laplanche, the former Lending Club chief ousted over a governance scandal last year, is stepping up lending at his new venture, determined to re-impose himself on the market for refinancing more than $1tn of credit card debt.

Mr Laplanche launched his firm, Upgrade, in April, having raised $60m in Series-A funding from a group of investors including Union Square Ventures, Ribbit Capital and CreditEase, China’s leading online lender. As at Lending Club, he is homing in on consumers struggling with big balances on credit cards — offering to swap a floating rate of, say, 17 per cent for a fixed rate about 5 percentage points less.

While Mr Laplanche declines to say how much business he has done so far, he has begun to boost volumes, responding to steady demand from consumers and also for high-quality assets from half a dozen core institutional investors. That new cadre of investors is unfazed by the scandal which erupted in May 2016, he said.

SoFi CEO Backs Out of Goldman Event Amid Sexual Harassment Probe (Bloomberg), Rated: AAA

Social Finance Inc. Chief Executive Officer Mike Cagney was supposed to take the stage at the Goldman Sachs FinTech Conference in New York City on Thursday, but he backed out amid a lawsuit and internal investigation at the firm.

Why broker-dealer robo advisors miss the fintech point (Financial-Planning), Rated: AAA

Over the past two years, there’s been a growing trend of broker-dealers announcing prospective launches of their own robo advisor solutions. From LPL developing a platform with BlackRock’s FutureAdvisor to Voya planning to launch a robo advisor, and Kestra Financial announcing it is working on a robo platform on the back of its acquisition of H. Beck, there’s been no shortage of announcements.

Launching a robo advisor does hold appeal among broker-dealers. Many of their reps are asking for it, either because it’s an easier way to handle smaller clients, or just to have a robo advisor option for millennial clients. Who wouldn’t want a button for the advisor’s website that young people can click to open up small accounts that will grow with time? And from the broker-dealer’s perspective, ideally, this helps them address the coming generational shift of assets from baby boomers down to millennials.

But for a broker-dealer that in the aggregate is losing 3% to 5% a year in asset outflows a decade from now, it’s a crisis, because a broker-dealer still has a multi-decade open-ended timeframe as an ongoing business entity. This is why we see broker-dealers, as well as RIA custodians, so obsessively beating the drum about advisors needing to focus more on younger clients. It’s not actually because advisors desperately need younger clients for our businesses to survive. It’s because they, the broker-dealers and RIA custodians, need us to get younger clients for them so their businesses survive and so they have younger clients after we’re gone and retired!

And so from the broker-dealer’s perspective, if millennials are pursuing robo advisor solutions, then the broker-dealer wants to roll out a robo advisor to get those younger clients and solve its own long-term generational issue. But here’s the problem with the strategy: robo advisors live and die by their ability to get clients online, and that’s not easy for anyone, especially a large base of independent registered representatives.

DOOMED TO FAIL

Betterment is just over $10 billion in total assets after six years. Wealthfront is just over $7 billion AUM in that same duration. Schwab made news for $15 billion dollars of assets, but has actually noted only a third of that total was new assets. Vanguard is now over $80 billion, but remember they had much of their assets already as well. Vanguard is direct-to-consumer through the Internet already; those in Vanguard’s Personal Advisor Services were predominantly existing Vanguard investors, simply upsold to human advice. Even Edelman online, which launched in early 2013, has accumulated barely 1,000 clients and just $62M of AUM after four years (and their average robo client is actually a baby boomer anyway.)

Source: Financial-Planning

VALUE IN EFFICIENCY
In other words, the real blocking point of robo advisors is the client acquisition cost — what it takes to market and get a young investor to invest on your platform. As the founding companies learned the hard way, this is not an “If you build it, they will come,” kind of asset-gathering opportunity. Instead, robos at best have been struggling to solve those client acquisition costs in the face of slowing growth rates, and many have been getting outright buried by those costs. That’s why robo advisor growth rates continue to slow down. Most of them have already sold, and most of the ones that are left aren’t even really focusing on a pure robo strategy anymore.

RealtyMogul.com Launches Second Real Estate Investment Trust, MogulREIT II, to Invest in Multifamily Apartment Buildings (BusinessWire), Rated: AAA

RealtyMogul.com, the online marketplace for commercial real estate investing, today announced the launch of the company’s second real estate investment trust or “REIT,” MogulREIT II.

MogulREIT II aims to invest in multifamily apartment communities across the United States that have demonstrated consistently high occupancy and income levels across market cycles. MogulREIT II also plans to invest in multifamily properties that offer value add opportunities with appropriate risk-adjusted returns and potential for appreciation objectives.

According to the U.S. Census Bureau’s Housing and Vacancy Homeownership Report, the U.S. apartment market has experienced a strong recovery, as evidenced by the steady drop in vacancies and an average annual effective rent growth of 3.9% per year, between 2010 and 2015.

MogulREIT II plans to only consist of properties that satisfy RealtyMogul’s rigorous zero-based underwriting process, which analyzes each potential deal from scratch through a combination of proprietary in-house analytics and underwriting. RealtyMogul also spends over $1 million annually for the use of third-party data and technology to vet each deal. The process is so intensive, fewer than 1% of the requests reviewed by RealtyMogul pass its high underwriting standards. Keep in mind there are risks to investing, including loss of capital, so one should evaluate the full offering materials.

RealtyMogul MogulREIT II Survey Data (RealtyMogul Email), Rated: A

Overview

RealtyMogul recently commissioned Harris Poll to conduct an online survey among over 2,000 U.S. adults to better understand the reasons people choose to rent over buying a house.

Americans have shifting priorities and owning a home might not be at the top of the list

  • Roughly 7 in 10 Americans (71%) believe the home buying process is overwhelming
  • 70% of Americans believe people these days will need to rent well into their 30’s in order to save enough money to buy a home
  • Over a third of Americans (35%) would prefer renting over owning a home to maintain a flexible lifestyle
  • Roughly a third of Americans (34%) would rather save their money to spend on traveling than to put it towards buying a home
  • A third of Americans (33%) would prefer to rent than own a home if it meant they could still afford small luxuries (e.g. eating out, fancy coffee, avocado toast) in their everyday life

Read the full survey results here.

LendingRobot CEO exits (Geekwire), Rated: A

Emmanuel Marot has left LendingRobot, the peer-to-peer lending company he co-founded in 2013. He served as CEO of the startup for the past four years, navigating LendingRobot through a merger with NSR Invest in August.

Marot isn’t sure what his next career move will be but remains General Manager of Zenvestment.com, according to LinkedIn.

Legislative Update 162 (Experian Email), Rated: A

Highlights this issue:

  • On September 7, the House Subcommittee on Financial Institutions and Consumer Credit has scheduled a hearing to review “Legislative Proposals for a More Efficient Federal Financial Regulatory Regime.” The Subcommittee has not released the full agenda, but it is expected that the hearing will focus on several bills affecting consumer credit.
  • Congress continues to consider legislation that would repeal the CFPB’s Arbitration Rule using an expedited legislative process under the Congressional Review Act (CRA). The House of Representatives passed a resolution of disapproval on July 25. The Senate is expected to take up the measure upon their return from the August recess, although there is uncertainty when a vote will take place given other priorities that Congress must pass by September 30, which is the end of the US Fiscal Year.
  • On August 30, three Democrats on the House Energy and Commerce Committee sent a letter to the Government Accountability Office (GAO) requesting that GAO further evaluate post-breach identity protection products used by government agencies.
  • Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the one first issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.

Read the full report.

StartEngine Files to Raise $ 5 Million Reg A+ Crowdfunding Offer (Crowdfund Insider), Rated: A

StartEngine, one of the most activea investment crowdfunding platforms in the US, has filed with the Securities and Exchange Commission to raise up to $5 million in common equity at $5 per share.

The actual listing is not yet live on the StartEngine platform. The filing indicates that up to an additional 100,000 shares may be issued as “bonus shares”. There are no selling shareholders and the entire proceeds will go to the company. According to the filing, the minimum investment is $500.

Web site steered U.S. borrowers into bad, illegal payday loans: CFPB (Reuters), Rated: A

The bureau imposed a $100,000 fine on California company Zero Parallel LLC, which as a “lead aggregator” identifies potential borrowers and then sells their information. The action shows the agency has its eye on the online side of the industry, which crosses state lines and has grown in recent years. Potential borrowers fill out web forms and then are immediately sent to a lender’s site to take out the debt.

According to a CFPB statement, Zero Parallel sold applications to lenders it knew did not follow states’ usury laws, interest-rate restrictions and prohibitions on who can make the loans, and kept borrowers in the dark about risks and costs.

Zero Parallel simply sold leads to the highest bidders, according to the CFPB, and borrowers did not know they were taking out illegal loans.

Zero Parallel will pay the fine without admitting or denying the allegations, the CFPB said. The agency also said it had reached an agreement with Zero Parallel’s owner, Davit Gasparyan, to resolve similar charges filed last year against his previous company, T3Leads, with a $250,000 fine.

FINTECH Gains Traction as Businesses Embrace Alternative Banking and Financial Solutions (PR Newswire), Rated: A

Global Payout, Inc. (OTC: GOHE) makes payment solutions available to clients around the world, serving the needs of everything from commercial enterprises to government institutions. Its Global Reserve Platform is a web-based banking platform that includes everything domestic, foreign exchange, and international payment service providers need to conduct financial transactions. It handles online banking, compliance, mobile wallets, card management, biometric payments, authentication, merchant payment processing, bill payments and more, while also offering core and traditional banking products. Global Payout’s primary focus in this area is logistics, in addition to small to medium size companies, banking, and travel firms.

The CEO of Able Lending Responds to the Rumors (Lend Academy), Rated: A

Yesterday, the CEO of Able Lending, Will Davis, reached out to me to clear the air. Here is his unedited statement:

We believe this story originated by the fact that we’ve been in active discussions with a number of originators to acquire Able, and there’s a non-zero chance this story was placed in order to throw an interested party off the trail.

This anonymous source doesn’t seem to be anyone close to Able, because Able does not own a portfolio of loans (it originates and distributes loans to direct lenders, who then hold those loans on their balance sheet) and therefore has no portfolio to sell. In any event, we have no plans to go out of business and no plans to declare bankruptcy.

Passive Investments In CRE: Do They Really Exist? (Seeking Alpha), Rated: B

The wealth of new crowd-funding opportunities in CRE is just the latest addition to a long line of traditional equity funds, REITs and ETFs already offering investors the chance to invest without the high upfront cost traditionally associated with a direct CRE investment. It sounds easy, right? But how truly “passive” are these opportunities?

The only problem with passive investing in CRE? Pure 100 percent passive investing doesn’t exist.

United Kingdom

RateSetter: Even a millionaire could no longer live off savings interest (P2P Finance News), Rated: AAA

ROCK-BOTTOM interest rates are now challenging the convention that someone with £1m in savings could live off the interest, RateSetter claims.

The peer-to-peer platform’s latest savings tracker found on average UK adults think they would need an income of £26,140 per year to live comfortably, but £1m in an average savings account would pay just 0.14 per cent interest, equating to £12,500 each year.

£1m invested in a one-year bank bond with an average rate of 0.79 per cent would earn just £7,900, while the same amount could earn £45,000 in a RateSetter account earning 4.5 per cent interest.

Investors opting to put their £1m into FTSE 100-listed stocks would have earned £80,000 in interest over the 12 months to the end of August, the research found.

Funding Circle reveals new brand positioning and identity with ‘Made to do More’ campaign (The Drum), Rated: A

The challenge was to find an emotional positioning that resonated with Funding Circle customers while instilling trust and confidence as a financial services company. Rooster Punk helped Funding Circle to identify a common thread that connects small business owners, investors and the people who work at Funding Circle. Results revealed they share a uniquely driven yet positive attitude to work and life, a restless determination to succeed and the tenacity to get there. The agency called this ‘Made to do More’.

Rooster Punk’s founder, Paul Cash, commented: “Developing Funding Circle’s new position and identity had to go deeper than a product message around faster business loans. We set out with the ambition that we didn’t just want people to buy from Funding Circle, instead we wanted them to buy into them.

Meet the firm which hopes to solve the late payment problem (City A.M.), Rate: A

This warning comes from Tony Duggan, chief executive of fintech firm Crossflow Payments, a company which acts like a cog between corporations, their suppliers, and funding providers – ensuring that suppliers don’t have to wait for a month or more to get paid.

Duggan’s warning is not just a reference to Brexit, but centres on the introduction of new payment practice laws, which will make it a criminal offence for a corporation not to make public whether it is paying suppliers according to the terms of the contract.

The code looks to stamp out problems with late payments. Ultimately it aims to improve the cashflow of businesses – largely suppliers – by making sure they are paid by their corporate customers on time.

Crossflow is a no frills sort of business; it’s basically a B2B version of peer-to-peer lending, and one that is currently pretty unique in the UK arena.

Peer-to-peer lender Linked Finance marks 1,000th loan (RTE), Rated: A

Peer-to-peer lending platform Linked Finance has funded its 1,000th loan for a small or medium sized company here.

Figures published by Linked, which facilitates loans from individuals directly to businesses outside the banking system, show €31m has now been borrowed through the platform.

The company, which was launched in 2013, also said that €2.5m in interest has already been repaid to Linked Finance lenders.

Marrying self organising teams and customer obsession – Interview with Andrew Lawson (Customer Think), Rated: A

Highlights from my conversation with Andrew:

  • Capital One was an early pioneer in big data, data driven decision making , customer centricity and human centred product design.
  • Back in 2014, a lot of banks were talking a lot about being customer centric but when you get inside the banks there was little evidence to back that up. [Ed: Have things changed?]
  • Customer obsession is very much behind the growth of peer-to-peer lending.
  • When Andrew joined Zopa in 2014 they were a team of around 50 people lending about £20mill per month.
  • Zopa was founded to “make money simple and fair”.
  • Zopa was awarded Superbrand status in the early part of 2017. The annual Superbrands’ league table is based on independent research to identify the UK’s strongest brands, as voted for by marketing experts and thousands of British consumers.
  • Zopa still thinks of itself as a start-up despite the fact that they have been going for 13 years now.
  • In that time Zopa have never spent any money on growing their brand and have grown organically and via word of month.
  • Zopa has won a bunch of customer service awards that celebrate and recognise their approach.
  • Zopa has recently moved to a system of self-organising teams and that is helping them to achieve more and deliver more on their customer promise.
  • In the first quarter of 2016 they delivered more than they had in the whole of 2015 with the same number of people.
  • Ultimately, it’s all about creating an environment where you find and allow great people to go and solve problems.
  • Andrew’s role is all about ensuring they have the right people in the right tribes solving the right problems. It’s not about him being able to come up with all the answers as that just doesn’t scale.
  • In terms of mistakes, initially they found that their tribes went too tribal and it was difficult seeing what was going on within the tribes. That was a problem particularly given the level of technical and strategic dependencies that exist between tribes.
  • On a day to basis, their teams work in a way that is akin to a modern agile environment and are able to pick the right model (1 week sprints, 2 week sprints, kanban etc) depending on their context and preferences.
  • As is the nature of agile working, they are constantly tweaking and looking for ways to improve.
  • Other challenges they have faced include the management of people from different backgrounds, skillsets and with different experiences.
  • Given that they are now 250 people in London, the next big challenge for them will be how do they move this system into a remote context.
  • The heart of their success has been in creating those relationships where there weren’t relationships before i.e. between business people and tech people. It’s easy when you sit next to them or are in the same office but more difficult when you are in different locations, time zones or even speaking different languages.
  • They embraced a lot of Spotify’s approach as there are lots of things written about them and by them on how they organise themselves (videos, talks, blog posts, slide shows etc). Google ‘Spotify and Tribes’ to find more.
  • Don’t make assumptions around customers needs. Go and ask then as you will almost certainly be wrong.


UK fintech investment rises in H1 (Finextra), Rated: A

More than a billion dollars was invested in British Fintech companies in the first half of this year, over a third more than the same period in 2016, according to trade body Innovate Finance.

Fintech employs over 60,000 people in the UK and contributes $9bn (c.£7bn) to the economy.

Two peer-to-peer lending platforms also received significant rounds of investment. London-based FundingCircle a marketplace which allows investors to lend directly to SMEs raised another £80m in equity funding. Venture capital group Accel led the funding round alongside investors such as Temasek from Singapore. The business lent £1.1bn in 2016. In June Zopa another peer-to-peer lender raised £32m from Indian investor Wadhawan Global Capital and European venture capital fund Northzone. The business plans to use the funding for the ambitious roll out of its own retail bank.

China

After regulators ban on coin fundraising, over 40 ICO platforms closed (Xing Ping She), Rated: AAA

Several platforms have taken steps after the central bank’s announcement of ban on ICO (initial issue of tokens). Up to September 5th, more than 40 platforms in China have taken measures to suspend the operation, registration or even permanently stop the service of ICO. Among them, ICOAGE, a well-known ICO platform, has launched a one-key withdrawal function. Meanwhile, ICOAGE’s official website says that it will actively negotiate with the project side, and even if the project does not accept the refund, ICOAGE will pay the relevant digital currency in advance to ensure the safety of investors. It is worth mentioning that, despite the regulation to stop the ICO, there still stages “the last madness” in the market, with some of tokens’ daily gains exceeding 30%.

China steps up financial regulation to address risks (China.org.cn), Rated: A

China’s ban on Initial Coin Offerings (ICOs), a digital coin fundraising scheme, was only part of a broader campaign to curb the country’s financial risks.

In an announcement Monday, China’s central bank ordered a complete halt on new ICO offerings, in which technology start-ups issue their own digital coins, or “tokens,” to investors to access funds.

Similar to ICOs, peer-to-peer (P2P) lending served as an Internet-based alternative for companies and individuals to borrow money. As the P2P industry took off in recent years, it also made room for high-profile fraud, which prompted regulators to act fast.

European Union

Klarna’s newest investor could hold the key to ‘growing the company’s revenues manifold’ (Business Insider), Rated: AAA

Klarna last week reported some impressive revenue growth, which, combined with a push into digital banking and recent deals with VISA and Stripe make its future prospects look rosy.

What could make Permira a strategic asset for Klarna, is its stake in Magento, one of the world’s biggest e-commerce platforms. The idea would be to integrate Klarna with Magento; a goal that Lundell says was in the works already before Permira’s entry.

Seeing that Magento runs some 15 percent of global e-commerce, getting visibility on the platform could open up a gigantic new market for Klarna and its CEO and cofounder Sebastian Siemiatkowski.

Mambu’s SaaS Banking Engine Helps N26 Transform Operations (Fintech Finance), Rated: A

Mambu announced that its innovative solution is being used by N26 to allow the Berlin-based mobile bank to integrate systems and quickly bring services to market in support of its growth strategy.

Before N26 was granted a full banking licence in July last year, it used the services of a partner bank and then migrated to its own platform in late 2016. Since then their customer base has grown by 500%, helping them reach the 500,000 customer mark in August 2017.

Mintos Reports Topping €300 Million Milestone in Online Lending (Crowdfund Insider), Rated: A

Latvia based Mintos has reached a new milestone having now topped  €300 million in online loans since platform launch two years ago. Mintos reports that more than €200 million has been invested in 2017 alone, making Mintos a market leader in continental Europe claiming a 40% market share.

Mintos states that as of September 2017, approximately € 1 million is invested in loans through Mintos daily, which is three times more than just a year ago.

European Central Bank working on new fintech licensing guidelines (Independent), Rated: A

The European Central Bank is working on new licensing guidelines that would also cover financial technology firms, Daniele Nouy, the ECB’s top bank supervisor told a conference on Wednesday.

The fintech sector, though still relative small, has been stealing market share from traditional lenders in a variety of sectors from payments to lending, attracting investment $6.5bn (£4.9bn) in the first half of the year.

Wirecard Supports Fellow Finance’s Market Entry in Germany and Ensures a Completely Digital Credit Process (Business Insider), Rated: B

Wirecard supports the Finnish FinTech company Fellow Finance to enter and provide a digital infrastructure for the German financial market. Wirecard is supporting Fellow Finance by placing their German full banking licence at the Fellow Finance’s disposal and in addition enabling a completely digital credit process. For example, the identification of the borrower as well as the signature of the credit agreement are made fully electronically.

The market volume of German alternative online financial services grew enormously between 2013 and 2015. In peer-to-peer consumer lending alone, there was year-on-year growth of 95%.

International

Q2 2017 Fintech Insights (FT Partners), Rated: AAA

Source: FT Partners

Get the full report here.

Banking the Unbanked through AirFox ICO (Cryptocoins News), Rated: A

AirFox’s groundbreaking idea involves using a mix of micro-credit and advertising to facilitate to make mobile data plans accessible to the world’s poor and underprivileged.

AirFox will launch their initial coin offering (ICO) on September 19, 2017 at 10:00 am EST. The token on sale is called AirTokens (AIR) and the period of sale has been fixed at 31 days. There are plans afoot to sell a total of 1.5 billion AIR, out of which 1.05 billion (70 per cent) are on offer at the crowdsale. AirTokens are based on the Ethereum (ETH) blockchain.

Laying out his vision Victor Santos, CEO and Co-founder of AirFox says, “Investors will be able to hold AirTokens that will be used by Lenders and Advertisers to sponsor the mobile internet of millions of users. There will be a market for buyers and sellers of AirTokens. Those who wish to take the AirTokens and lend micro-credit to users, will also be able to earn an interest using the data that we collect on the smartphone.”

AirFox raises $ 6.5M in token presale (CoinReport), Rated: A

AirFox, the firm utilizing advertising and blockchain technology to bring smartphone data and internet to 4 billion people in the developing world, has met the presale target of its token, AirToken (AIR), almost two weeks early, raising $6.5 million, according to an email CoinReport received from BIGfish Communications, AirFox’s PR firm.

India

Modalku Gets Audited to Gain Public Trust (Jakarta Globe), Rated: A

Mitrausaha Indonesia Group, also known as Modalku, a homegrown marketplace that provides peer-to-peer lending, received an “unqualified opinion” which is the best possible audit outcome  from public accounting firm Purwantono, Sungkoro & Surja, hoping it will help the company gain the public’s trust.

Purwantono, Sungkoro & Surja, a member of Ernst & Young, granted the company an “unqualified opinion” ranking after reviewing the company’s financial statements, income reports and other relevant comprehensive income statement, equity changes, cash flow datat and other information for the year ending Dec. 31. A ranking of this stature means the statements are deemed sound.

Credit scoring platform CreditVidya bags $ 5 mn from Matrix, Kalaari (VC Circle), Rated: A

Mumbai-based InfoCredit Services Pvt. Ltd, which operates credit scoring platform CreditVidya, has raised $5 million (Rs 32 crore) in a fresh round of funding led by Matrix Partners, the company said.

Existing investor Kalaari Capital, which had invested $2 million in June 2016, has also participated in the round. While Matrix put in Rs 23.81 crore, Kalaari accounted for the rest.

What is P2P lending and borrowing: All you want to know about Digital marketplace for loans (Financial Express), Rated: A

In layman’s terms, Peer-2-Peer (P2P) lending and borrowing is like a digital marketplace for loans. Hence usually it is known as ‘marketplace lending’ or often gets confused with crowd-funding. Instead of applying for a loan with a bank, NBFC, private finance company or any other loan institution, you can request a loan from regular people like you and me (therefore, the term Peer-2-Peer).

Most of these loans are unsecured for a large number of people who are underbanked or thinly banked.

The actual logistics of Peer-to-Peer can be a little more complicated in India, but some platfoms like ours allow the borrower to download the app, fill the application form and apply for the loan. As a borrower, you have to fill a quick online registration form and pay the upfront registration fee which is refundable. Then proprietary credit assessment is done and a brief commentary of why you want a loan is shared with the lenders. The app requires the loan applicant to submit bank statement, upload basic KYC documents like PAN card, Aadhaar card etc. The proprietary algorithm assigns the loan interest rate and tenure to post the loan on the marketplace for lenders to assess and invest.

MENA

Developing Asia accounts for large trade finance gap (The Asset), Rated: A

Businesses particularly the micro, small and medium-sized enterprises (MSMEs) continue to face challenges in accessing sufficient credit, resulting in a global trade finance gap of US$1.5 trillion in 2016.

Emerging economies continue to face the greatest shortfalls with developing Asia accounting for 40% of the global total in trade finance gap. The MSMEs have the biggest difficulties in accessing trade finance, representing 74% of the total rejections in 2016, compared with 57% in the previous year.

The cost of regulatory compliance can lead banks to exit client relationships as reflected by the 40% response in the 2016 survey and 45% in 2015, including the withdrawal of correspondent relationships.

Mideast fintech startup NOW Money fetches $ 1.46 mln (PE Hub), Rated: A

NOW Money has closed its bridge funding round with a total of US$1.46m.

In addition to the recent US Venture Capital investment, mentioned in a previous press release, this funding round includes $700,000 from Dubai-based Venture Capital firm, Myrisoph Capital. Other contributions have come from private investors and MENA-based women’s investor network WAIN.

WAIN is the first investor network for women in the MENA region. Its goal is to build an informed ecosystem of women investors who support women entrepreneurs in the Arab world.

Canada

IOU Financial Partners with Rubicon Global to Fund Recycling Ecosystem (Business Insider), Rated: A

IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), a leading online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Rubicon Global.  IOU joined the RUBICONPro buying program to provide Rubicon’s network of independent haulers with fast, convenient and reliable, non-collateral funding solutions.

Where bank loans are not an alternative, an IOU term loan will help Rubicon’s haulers invest in equipment to take on more recycling volume and proudly join Rubicon’s expansion projects for a more sustainable world.  IOU loans will also be provided to Rubicon’s base of thousands of small businesses embracing recycling to contribute to a healthy planet.  IOU will also promote Rubicon’s innovative model to its thousands of existing and past borrowers.

Africa

Development of African ­crowdfunding platforms (DandC), Rated: AAA

Africanise crowdfunding means setting up local crowdfunding platforms with adapted technology for local investment. No bank account? Not a problem! Many African countries lack conventional money transfer infrastructure; bank accounts and credit cards still tend to be the exception, not the rule. To permit widespread participation in crowdfunding in such circumstances, mobile phone-based money transfer services (like the Kenyan financial service M-Pesa) are needed. The Indian crowdfunding platform Ketto () works with a courier service that collects cash payments.

Copying these approaches is not the way to move ahead in Africa, not least because of the lack of an adequate institutional and legal environment. First and foremost, SME financing  requires national crowdfunding platforms with traditional financing options (donation-, rewards- and lending-based). Minimum contributions must be small and payable in local currency.

Authors:

George Popescu
Allen Taylor

Monday August 28 2017, Daily News Digest

artificial intelligence

News Comments Today’s main news: Blend lands $100M investment. Funding Circle achieves ISA manager status. Hive raises over $8M. Innovate UK invests 700K GBP in Paybase. China Life, Baidu launch $1B internet fund. Klarna’s profits increase 138 percent. Today’s main analysis: Bank of America Merrill Lynch to implement AI. Today’s thought-provoking articles: Congresswoman asks FDIC to hold public hearing on […]

artificial intelligence

News Comments

United StatesFlipkart, Amazon pose new competition for fintech lenders.

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

LendingClub Hit with Lawsuit (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has been hit with a lawsuit that names former CEO Renaud Laplanche alongside current and former board members and former CFO Carrie Dolan. The complaint, filed in the Court of Chancery in Delaware, states;

“Throughout the period December 11, 2014 and continuing through May 9, 2016 (the “Relevant Period”), the Individual Defendants breached their fiduciary duties to LendingClub by failing to institute adequate internal controls regarding financial disclosures, related party transactions, and data integrity and security, all while causing LendingClub to represent in the Registration Statement and a series of subsequent filings that such controls were sufficient.”

The suit has been filed by two shareholders; Kelvin Farley and Jay Fink.

Waters Calls on FDIC to Hold Public Hearing on SoFi’s Application for Bank Charter (House.gov), Rated: AAA

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, sent a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, calling for the FDIC to hold at least one public hearing on Social Financial, Inc.’s (SoFi) application to establish an Industrial Loan Company (ILC).

In the letter, Ranking Member Waters states that changes in the financial services industry and financial regulation necessitate a public hearing to examine the policy and legal implications of granting federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (fintech) company like SoFi.

I am writing to request that the Federal Deposit Insurance Corporation (“FDIC”) hold at least one public hearing on Social Finance, Incorporated’s (“SoFi”) application to establish an industrial loan company (“ILC”) to provide FDIC-insured Negotiable Order of Withdrawal (“NOW”) accounts and credit card products. As you know, because de novo ILC formations have been affected by regulatory and statutory moratoria for several years, the FDIC has not approved a deposit insurance application for a new ILC charter for some time. Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), changes in the financial regulatory regime and financial services industry justify a public hearing to examine the policy and legal implications of granting Federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (“fintech”) company like SoFi, a number of which I will discuss in more detail below.

Appropriate regulatory oversight of any ILC is an essential prerequisite to approving any application for deposit insurance backed by taxpayers. The FDIC has previously acknowledged the importance of strong oversight of any insured bank and its parent company when discussing oversight of ILCs.[1] In reaction to a number of concerns previously raised on the regulation of ILCs, the FDIC even went so far as imposing several moratoria on its ability to approve ILC applications for deposit insurance in 2006 and 2007 to, in the words of former FDIC Chairman Sheila Bair in testimony before the House Financial Services Committee, “allow the FDIC to carefully weigh the safety and soundness concerns that have been raised regarding commercially-owned ILCs. At the same time… the moratorium provides an opportunity for Congress to consider the important public policy issues regarding the ownership of ILCs by commercial companies.”[2]

While some experts have touted the possibility that fintech firms can help promote financial inclusion, others have underscored the challenges posed for our current regulatory regime to oversee these types of companies and have underscored the need for policymakers to carefully evaluate the consequences of allowing them access to deposit insurance and the Federal Reserve discount window.[11] Thus, Federal regulators have taken a varying degree of actions focused on fintech companies and services. For example, while the Office of the Comptroller of the Currency (“OCC”), under its “Responsible Innovation” initiative, has proposed a Special Purpose National Bank Charter for fintech companies (“fintech charter”)[12] questions have been raised about whether the benefits to consumers for this new charter will be widely and fairly shared, and whether there is adequate legal authority, let alone a clearly defined and modern regulatory framework, for such a fintech charter.[13] Indeed, a lawsuit has been filed by state banking regulators challenging the OCC’s authority.[14] As should be the case with the OCC and its proposal to use its authority to federally charter fintech companies, the FDIC should thoroughly consider the implications of offering access to the deposit insurance fund for ILCs that will result in expanding the type of institutions to it, like fintech firms. Fintech firms, whose operations cross state and international boundaries, and may exist entirely online, were undoubtedly beyond original congressional intent in permitting ILCs to access deposit insurance and it is appropriate for stakeholders to weigh in on whether it is appropriate for these firms to have this access without proper oversight of their parent companies.

The chartering of a fintech company as an ILC also raises a number of consumer protection concerns that the FDIC should consider. For example, the California Reinvestment Coalition (“CRC”) has opposed SoFi’s application on the basis of concerns with the institution’s Community Reinvestment Act (“CRA”) plan, as well as its intended approach to financial inclusion, fair lending, and consumer protection.[17] CRC notes that SoFi’s business model targets “students from elite universities that have strong earnings and wealth potential,” and offers products and services “designed to exclude working class households.” CRC also notes that SoFi’s CRA plan is grossly inadequate, considering that: (1) SoFi’s assessment area will be limited to areas in Utah, but the company will accept deposits and operate nationally; (2) SoFi’s current core products are not designed to serve the “convenience and needs” of low- and moderate-income (“LMI”) communities in which the bank would operate,[18] but rather are focused on serving SoFi’s members; and (3) SoFi’s CRA plan does not encompass measurable commitments to lending, investments, and services for LMI communities.

The full letter is here.

Bank of America Merrill Lynch has become the latest bank to implement AI (Business Insider), Rated: AAA

Bank of America Merrill Lynch (BAML) has 

Bo Brustkern and Emmanuel Marot (Lend Academy), Rated: A

On this episode of the Lend Academy Podcast I brought together both CEOs to talk about this merger; what it means for their respective customers as well as the industry as a whole.

In this podcast you will learn:

  • The original idea that led to the founding of both companies.
  • The strengths of both companies and why they are a complementary fit.
  • Why they decided to come together and merge companies now.
  • The scale and profitability of the combined company.
  • The unique aspects of the LendingRobot Series investment offering.
  • The platforms that the LendingRobot Series invests on.
  • The different funds that make up the Lending Robot Series.
  • The choices for non-accredited investors on the combined platform.
  • Their value proposition today for investors.
  • Who the target customer is today for the combined company.
  • How the two brands will operate going forward.
  • What the combined company will look like in 12 months time.
  • Where marketplace lending is going in the future.

LendKey, Earnest Alter Student Loan Refinancing Rates (LendEDU), Rated: A

Two student loan refinancing companies, LendKey and Earnest, have changed their student loan refinancing interest rates in recent weeks, according to LendEDU.

Effective August 10th, LendKey’s variable interest rate range for their student loan refinance product was altered slightly. LendKey, a leading lending partner of both banks and credit unions, now offers a variable rate range between 2.67 and 6.31 percent for student loan refinancing.

This new variable rates for LendKey mark an increase on both the low and high ends of the range. Previously, the online lending partner offered a variable interest rate range between 2.52 and 6.16 percent since June.

Online Mortgage Lender Blend Lands $ 100 Million Investment Led by Greylock (Crowdfund Insider), Rated: A

Blend has landed a significant funding round to the tune of $100 million. The funding was led by Greylock Partners with participation by Emergence Capital. Existing investors joined in the round as well.

Wells Fargo, U.S. Bancorp Turn to Startup to Speed Up Mortgage Applications (WSJ), Rated: A

Wells Fargo & Co. and U.S. Bancorp have signed deals with mortgage-software startup Blend Labs Inc. to move more of their loan applications online.

Ethereum-Based Invoice Finance Platform Hive Raises Over US$ 8 Million (Coin Journal), Rated: A

The Hive Project, which intends to build the world’s first cryptocurrency-based invoice financing platform, has raised 2,087 BTC, or over US$8.9 million, from 2,234 investors through its initial coin offering (ICO).

Using invoice finance, the business “sells” its outstanding invoices at a small discount to a financier. The business immediately receives up to 85% of the value of the invoice instead of having to wait the usual 30 to 90 days to get paid by customers.

Hive uses the Ethereum blockchain and smart contracts to assign a unique fingerprint to every invoice issued. These invoices are then tokenized and published on a blockchain, and made available as a shared source of liquidity for factoring and invoice financing.

Debate on Regulatory Reform (PeerIQ), Rated: A

JP Morgan CEO Jamie Dimon in his annual letter would agree that the banking system is safer and stronger today. Nevertheless, Mr. Dimon believes that economic growth and lending is below potential. For instance, JPM estimates $1 Tn in loans could have been generated in recent years generating an additional 50 bps in annual GDP growth thru regulatory reform.

The specific regulatory reform areas Mr. Dimon identified include:

  • Simplification of the annual stress-testing process
  • Release or enable banks to deploy excess capital towards small business loans, lower middle market, and near-prime mortgages
  • Rationalization of supplementary leverage ratios and operational risk capital
  • National servicing standards for the mortgage servicing market
  • Federal Housing Administration (FHA) reform
  • Complete securitization standards to encourage private capital and reduce exposure to taxpayers

Role for 3rd party risk infrastructure to strengthen markets

Large banks are increasingly playing the role of financial intermediaries that connect non-banks to the capital markets. Banks are providing liquidity facilities (“lending to the lenders”) and capital-light securitization programs. Although Yellen is right that lending continues to grow, critically, the nexus of credit formation–including for a majority of personal loans, auto loans, student re-fi loans, and even mortgages–now takes place between a consumer and a non-bank.

Under this new landscape, the soft underbelly of the credit markets has shifted from bank wholesale funding to non-bank wholesale funding. And when investor confidence seizes, the transmission mechanism connecting policy to the real economy can break down. Spreads widen, funding costs increase, and markets freeze exactly when policymakers seek to ease financial conditions.

Q&A with Head of Alternative Lending at Fintech Marqeta (Crowdfund Insider), Rated: A

Recently, Crowdfund Insider published an article about Marqeta signing a partnership with Visa on payments and loans. The marriage is designed boost innovations in commercial and consumer payments and online lending. Visa also made a strategic investment in Marqeta at that time to the tune of $25 million. Total investments in Marqeta now stand at over $70 million.

Isn’t this just all about borrowers getting a better interest rate [and investors earning more]?

Candace: Lenders are looking to increase renewals (repeat borrowers are easier to sell than new borrowers), beat out the stackers (top of wallet, top of mind) and decrease risk (new data on spending reduces risk for future loans). On the heels of 2016, these have become as important as the interest rate for the lender.

For the borrower, speed to funds has become increasingly important, and distributing loan funds to a  card allows a way to immediately spend the funds without waiting for the funds to be deposited into the borrower’s bank account.

If Credit Cards drop their rates then they can become competitive. For Visa to partner with Marqeta – isn’t it just how the debt is carried? For the consumer / business, they are indifferent?

Candace: The rates apply to the underlying loan per the agreement between the lender and the borrower, not to a prepaid card that is used to assist with making purchases. The prepaid card bears no interest charge. The terms for the loan (from which the loan proceeds are distributed to the card) continues as agreed upon between the lender and the borrower. That debt does not change.

How Riskalyze Won The Hearts Of Financial Advisors And Upgraded The Advice Industry (Benzinga), Rated: A

Ahead of Riskalyze CEO Aaron Klein’s speaking engagement at the Benzinga Fintech Summit in San Francisco, Benzinga caught up with him to learn more about how the company is upgrading financial advice.

BZ: How did you go about identifying this need for financial advisors? What kind of research did you do?

What’s interesting is that we invented a new space. There was no risk-alignment platform that helped advisors do that. There were questionnaire products that answered half the question, there were a few portfolio analysis tools that would answer the other half, but we invented the concept of the risk number. We can help advisors pinpoint the client’s risk number and then we score portfolios using that number.

Klein: I’ll talk about the two different sides of the coin. A lot of the innovation was figuring out those sides of the coin and bridging the two together. On the one hand, we took some concepts that had really never made it out of academia and into everyday use. They’re centered around the economic framework called prospect theory, which won the Nobel Prize for economics in 2002. We took prospect theory and built a bunch of proprietary technology on top of it to understand how to move up and down a client’s personal financial spectrum to understand when they prefer risk and when they prefer certainty.

Once we do that, we built a mathematical formula behind the scenes that lets advisors turn that into the client’s risk number. That’s how the client-side works.

On the flip side, we need to match that up with a portfolio. So, the inputs for that piece of the technology are largely market data. We effectively take daily pricing data for nearly a quarter-million securities — every U.S. stock, ETF, mutual fund, variable-annuity sub accounts, SMA third-party money managers, proprietary non-traded strategies, all kinds of different products. We take all the data for those, we have new data streaming into our systems every night on those securities.

 

This Week In Retail: Funding, Finance And Tech (PYMNTS), Rated: A

This week in retail, we’ve seen news coming in from multiple sides, including that of Apple’s projected increase in smartwatch salesU.K. online lender Prodigy’s funding news for expansion into the U,S.,  Walmart’s two new partnership announcements, and the news that the CFPB is ordering American Express to pay out money to those hurt by unfair practices.

American Express is in the hot seat this week as the Consumer Financial Protection Bureau (CFPB) ordered the credit card company to pay out a very large amount to consumers in Puerto Rico and the U.S. Virgin Islands. It’s being confirmed that over a 10-year period, American Express  provided inferior card offerings to people in those territories than what was being offered in the U.S.

Here are the numbers:

  • $240 million | Amount Prodigy Finance raised in its venture capital equity funding round
  • $96 million | Amount CFPB ordered American Express to pay out to affected Puerto Rico and the U.S. Virgin Islands consumers
  • $200 | Starting point for potential Walmart installment loans

5 Trends That are Changing the Millennial Economy (Huffington Post), Rated: A

According to statistics from the U.S. census bureau, Millennials make up about 83 million of the nation’s current population. The unique experiences of the Millennials will shape the way we buy and sell, forcing companies and businesses to adjust their business strategy for decades to come.

For example, a growing number of Millennials are choosing to live with their parents. They have been reluctant to buy items such as cars, music, and luxury goods. Luxuries that used to be important for previous generations are not as important for Millennials. They are reshaping the real estate market and are responsible for the growth of the sharing economy.

A recent survey of Interns conducted by Goldman Sachs in 2013, found out that 30% of millennials do not intend to purchase a car in the future. 25% said they will only buy one if there is a need for it, otherwise they are indifferent. Another 25% said buying a car is important but not a big priority. 15% said purchasing a car is extremely important. And the last 5% do not feel strongly about it.

recent report shows that student loans have increased by 84% over ten years with an average student having a loan balance of $29,000.

How to choose and switch to a better bank for you (WPXI), Rated: B

Online banks are now offering much higher rates on savings accounts — significantly higher than the current rates at traditional, bigger banks. So with that in mind, why not just move your savings to take advantage of the bigger return?

To give you some context, online bank ally recently increased the rates on its savings accounts to 1.15% — while the rate on a regular savings account at Bank of America currently sits at only 0.01%.

United Kingdom

Funding Circle receives ISA manager status (P2P Finance News), Rated: AAA

FUNDING Circle has received ISA manager status from the HMRC, Peer2Peer Finance News can reveal.

Approval was granted in July, less than two months after the platform won full FCA authorisation.

However, the platform has no immediate plans to launch its IFISA product, telling customers earlier this week that it intended to roll out the tax-free investment wrapper “before the end of the tax year.”

How Funding Circle is helping small businesses face the challenges of Brexit (Prospect Magazine), Rated: A

Fast forward to today, we’ve originated over £3.2 billion worth of loans through the platform. In the UK, that lending has helped create about 60 thousand jobs, and the £2.5 billion of loans has created about £5 billion of GDP or gross economic value added, according to an independent survey by the Centre for Economics Business Research.

In fact, we think we make up about 2 per cent of the total money that’s going to gross-lending small businesses. And if you actually look at the money going into the economy, we make up about a third of net new lending— which is the preferred Bank of England measure. We did about 300 million versus 600 million in the entire banking system in the first half of this year.

Say a small business decides to come to you: what is it they’re getting that they don’t get with a bank?

We turn around loan applications specifically within 24 hours. We are better in that we give better service; everyone can find an account manager.

We’re cheaper, in that our prices are very, very competitive, and often we’re often providing cheaper loans than businesses would be able to get at the bank. We also don’t have the overheads that banks have.

We all know that Brexit is going to shake up the financial sector. What can Funding Circle do to help businesses rise to the challenge?

Net lending by banks fell by 220 million in Q4 last year. Ours actually rose to 167 million.

On top of that, we’ve also had large insurance companies like Aegon, which is a big Dutch insurer, commit to fund £160 million in year one, but actually committed over a four-year period to purchase our loans. The fact a large foreign insurer would want to do that shows that actually, despite Brexit, there’s a vote of confidence in the UK economy, particularly in small business.

FinTech startup Paybase gets £700,000 from Innovate UK (UK Tech), Rated: AAA

London-based FinTech startup Paybase has received a grant of almost £700,000 from innovation agency Innovate UK.

Expected to launch later this year, Paybase has developed an ‘end-to-end solution for payments, compliance and risk’, which can be accessed through a unified API.

Why P2P is still the crowd despite passive lending (AltFi), Rated: A

There’s been much collective gnashing of teeth over the last few months at the evolution of peer to peer lending, as practised by ZopaRatesetter and most latterly Funding Circle. The big bone of contention has been a shift amongst all three – with FC falling into line just a matter of days ago – to a passive lending model. This means that lenders on said platforms now lend passively to a full slice of borrowers rather than picking their borrowers individually. To the critics this implies that the traditional peer to peer (P2P) model is slowly dying out. If you’re not lending to your peers, don’t you just sound like any other finance business such as a bank?

I’m not convinced by this criticism. Collectively a crowd – many peers – are still lending to another crowd, but just in a format that looks closer to a passive, collective fund basis rather than one on one. There is no bank balance sheet lurking around and the ‘crowd’ still sets the rate at which it’s happy to lend. Credit scoring has always been a feature of all the platforms, whether they be ‘pure’ P2P or passive P2P. Someone, somewhere at the centre of the online marketplace needs to set the lending criteria and make decisions about who to lend to.

What about peer to peer? (Library of Things), Rated: A

In this week’s bonus episode co-founder Emma looks at the sharing economy, peer to peer lending, and explains why Library of Things have chosen to operate from a physical space.

Listen to the podcast here.

How Risky Is Borrowing Money Online Through Peer-to-peer Lending (FX Daily Report), Rated: B

It is almost true that borrowing money from traditional financial institutions is a thing of the past.

It has been observed that P2P online lending platforms are not the source of the problem or the risk. However, it seems to be the ease with which loans are available that causes the problems.

Online P2P lenders also offer student loans. It is very important to realize that student loans these days are available everywhere. But what is ultimately the truth is that the loans are burdensome. Any student that avails of such a P2Ponline student loan emerges as a graduate burdened with a heavy debt.

If an individual wants to apply for a P2P online loan, it is best to start with checking credit reports. It is a good idea to fix any errors that may be found on these reports. Otherwise, the interest rates may be hiked up. It is also a good idea to do some research prior to applying for the loan. It is worthwhile to find out as to which lender offers a lower rate of interest even if they fall outside the ring of online P2P lenders. Never decide on which loan to pick up by looking at the monthly amount to be paid. The total amount that you are going to repay and the time period of the repayment are the more important factors to be considered. This gives the total cost of the loan.

China

Big banks strike partnerships with technology companies as part of fintech wave (South China Morning Post), Rated: AAA

Bank of Communications, the nation’s fifth biggest lender, joined with Suning Holdings and its financial affiliate Suning Finance as strategic partners last week, the latest of the big five banks to ally with internet firms.

So far, all big-five banks, accounting for more than one-third of China’s banking assets, have allied with technology giants.

Industrial and Commercial Bank of China allied with e-commerce major JD.com for cooperation in sectors including fintech, retail financing, corporate credit and asset management. Agricultural Bank of China agreed to work together with dominant search engine operator Baidu. Bank of China and Tencent Holdings jointly set up a fintech lab, focusing on cloud computing, big data, block chain and artificial intelligence.

Earlier this month, mid-sized Industrial Bank and JD.com’s financial affiliate JD Finance launched a debit card in Beijing and most cities in affluent Zhejiang province.

China Life and Baidu to launch $ 1 billion internet fund (Reuters), Rated: AAA

China Life Insurance Group Co and Baidu Inc will form a 7 billion yuan ($1 billion) private equity fund, targeting internet and other technology investments, China Life’s listed arm said on Thursday.

The Baidu Fund Partnership will be capitalized by China Life through a special partnership, which will contribute up to 5.6 billion yuan, China Life Insurance Co Ltd said in a Hong Kong Stock Exchange statement.

Baidu, the Chinese language internet search provider, will contribute as much as 1.4 billion yuan.

Ant Financial’s “TechFin” vs JD Finance’s “FinTech” (ASEAN Today), Rated: A

Alibaba’s Ant Financial Services Group and JD Finance are at loggerheads in the Chinese, and increasingly, global e-commerce scene. In 2015, JD Finance recommended the use of “FinTech.” In December 2016, Ma Yun coined the ”TechFin” as a rebuttal, and as a show of thought leadership.

Ant Financial’s unveiling of “TechFin” shows the firm’s focus on building technology rather than financial products.

Critics believe there is not much difference between TechFin and FinTech. Critics believe Ant Financial coined TechFin to gain a foothold from the conceptual standpoint; a counteroffensive to JD Finance’s aggressive marketing of FinTech. This is inevitable considering “FinTech” as a term already achieved credibility within the finance and other related industries.

Ant Financial and JD Finance are more complementary than competitive

Onlookers see Ant Financial and JD Finance as longstanding rivals. JD.com’s recent sale of JD Finance for US$2.1 billion in cash was seen part of a deal to spin off its burgeoning finance arm and raise its game against Ant Financial.

Ant Financial focuses on the traditional model of the Internet while JD Finance focuses on product innovation, for a start. Each business model has its advantages.

Ant Financial also seeks to leverage on Ant Check Later (花呗), a virtual credit card, to open up a whole new road map for credit distribution in Internet finance. In contrast, JD Finance aims to boost user’s consumption through its products. Its Jingxiaodai (京小贷) appeals to merchants who need fuss-free and almost instant access to credit.

European Union

Klarna just posted some impressive half-year figures — profits soar by 138 percent (Business Insider), Rated: AAA

The Swedish e-invoicing giant posted 2,05 billion Swedish crowns ($254,2m) in revenue for the first two quarters of 2017. Meanwhile, operating profits jumped to 228 million ($28m) from last year’s 96 million ($11,9m), reports tech site Di Digital.

Yesterday, Breakit reported that the company is teaming up with Stripeto boost growth in the U.S.

Credit Suisse Eyes 2018 Launch for Blockchain Loans Platform (Coindesk), Rated: AAA

A group of banks led by Credit Suisse is eyeing the launch of a commercial platform for blockchain-based syndicated loans, according to reports.

The group involved finished the second phase of their testing in March.

Using smart contracts to reduce those turnaround times could increase the market’s appeal to potential lenders and investors, according to Aidoo.

Worldcore Payment Institution Announces ICO (Coin Idol), Rated: A

Worldcore announces an Initial Coin Offering (ICO), as part of their wider expansion plans.

The company envisions to become a worldwide reference for the financial tomorrow, by integrating its successful payment solution into the blockchain sector of economy.

Worldcore ICO starts on October 14 of 2017. In total, a maximum supply of one billion WRC tokens at $0.10 USD each, will be available for purchase.

Corlytics named by Allen & Overy in its regtech programme (Finextra), Rated: B

Magic Circle law firm, Allen & Overy, has named Corlytics as one of the eight companies selected to move into its Fuse programme. Fuse is a newly launched innovation space where its lawyers and technology firms team up to develop legal, regulatory and deal-related improvements.

International

Ten Fintech Conferences to Attend This Fall (Lend Academy), Rated: AAA

FinovateFall

When: Sept 11-14, 2017
Where: New York City Hilton Midtown
Link:  /> Discount code: F17FALLLAT

LendIt Europe 2017

When: Oct 9-10, 2017
Where: London
Link:  /> Discount code: LENDACADEMYVIP

American Banker’s Digital Lending & Investing

When: November 2-3, 2017
Where: New York, NY
Link: 

AltFi Global Summit

When: November 7, 2017
Where: Amsterdam
Link: 

Marketplace Lending & Alternative Financing Summit 2017

When: December 3-5, 2017
Where: Dana Point, CA
Link: 

This event is put on by the Opal Group and is the only west coast event this fall. This is its second year and while I did not attend last year I heard it was a good event with a focus on the investor side of marketplace lending.

Digital Banking – Old Wine in New Bottle? (Fintech Weekly), Rated: A

There was a time when digital banking was perceived as synonymous with online banking and mobile banking. Financial services industry, along with other sectors, is experiencing an explosion of digitization thanks to smartphones, tablets and access to affordable high-speed internet. The number of smart phone users is expected to equal the number of bank accounts in near future as all mobile users link their bank accounts to their smart phone and get onboard with mobile-based digital wallets and savings platform.

Given this, it is imperative to take a fresh look at whether digital banking means the same as it did a decade ago – both for banks as well as customers – especially since there does not seem to be a consensus on the definition of ‘digital banking’.

Customers today do not have the patience to navigate through multiple screens. They do not want to fill the same KYC details over and over for each product. Presenting paperwork at the branch to support an online application is a big no-no. They expect to resume the application they started on Smart phone on their home computer and may want to talk to the customer care executive on phone while doing that. They do not want to be bothered with cold calls and random sales pitches; they prefer to see only personalized and contextual cross-sell offers with direct purchase links. In short, digital customer today wants one-touch, one-click, personalized and integrated user experience across channels.

On the flip side, while customers enjoy the convenience of digital banking for routine tasks, they also want to continue using the branch when they need some face time with a seamless switch between digital and personal interaction. They do not want to forego the privilege of walking into the local branch despite being able to do all their banking via the web or smartphone.

Australia/New Zealand

Fintech startup shares $ 7m of investment (NZ Adviser), Rated: AAA

Since its launch in June, fintech startup Ilumony has reported more than $7 million in financial investments. Of the $7 million, it has charged no fees for advice on $1 million worth of customer KiwiSaver money.

India

Fintech lenders have new competition: Flipkart and Amazon (The-Ken), Rated: AAA

Though Flipkart launched in 2007, it was only in 2013 that e-commerce really took off in India. That was the year Amazon entered India through a marketplace model, and Flipkart too launched its own marketplace model.

From selling smartphones, books, and apparel to customers, the two of them now started offering warehouses, packaging, and logistics to sellers.

No Flipkart or Amazon for EzCred; this startup wants to pursue offline shoppers (India Times), Rated: A

When ecommerce companies like Flipkart and Amazon wanted to expand to the nooks and corners of the country, they borrowed the idea and recently started offering “No cost EMI” option on selected products. Taking a step further, you now have many fintech companies that have lined up on ecommerce platforms to offer loans to consumers.

Launched in January 2017, EzCred is an alternate lending startup which offers loans to consumers who walk into shop at offline stores.

“Offline is a much larger play than online. A majority of transactions are still done offline,” says Maheshwari.

The startup now has plans to roll out an app for customers to enable them to apply for loans directly. The platform has a credit assessment system which enables the startup to assess the borrowers’ repayment capabilities. This involves various data sources like the borrowers’ CIBIL score, bank statements, information provided by customers, which are then matched with the credit policy of EzCred.

India’s draft data protection law to hinge on user consent; will be ready only next year (Factor Daily), Rated: A

A draft data protection law, which is at the core of the Indian government’s stance that Aadhaar does not violate citizen privacy, will have user consent as its mainstay with a few exceptions.

The draft legislation is expected to be ready in about a year.

This was revealed in interviews with a member of the committee set up by the government to come up with the draft framework — B N Srikrishna, a former Supreme Court judge who is heading it, and a second person with knowledge of the committee’s thinking.

P2P lenders may be allowed to operate offline (The Hindu BusinessLine), Rated: A

In a bid to impart vibrancy to the fledgling peer-to-peer (P2P) lending space and also further the cause of financial inclusion, the Reserve Bank of India is believed to be looking at allowing players in the sector to have an offline presence besides an online one.

On-the-ground presence may help the platforms reach out to those who are currently not being served by banks/non-banking finance companies and also help break the vice-like grip of money lenders on local lending, especially in rural areas and small towns.

Asia

Why e-commerce firms could replace banks as the region’s leading lenders (Southeast Asia Globe), Rated: A

Peer to peer lending (P2P lending) first entered the wider public’s consciousness when it rose from the ashes of the global financial crisis in 2007. By cutting out traditional intermediaries, such as banks, the lending platforms, were able to offer borrowers lower interest rates and lenders higher returns. They were populist alternatives to the casino capitalism that had brought Wall Street to its knees.

According to a 2015 report by Deloitte, in Indonesia, Malaysia, the Philippines, Singapore and Thailand there exists “a clear disparity between what SMEs want and expect from banks and what the banks can deliver”. In Indonesia, the report found as few as 6% of SMEs were able to access bank loans.

Recent statistics from the Asian Development Bank show that the situation is similar in Myanmar, which the bank says suffers from a $2 billion shortage in available credit, a shortfall that Brad Jones, CEO of Wave Money, attributes to the country’s excessively cautious banking regulations.

According to data from Singapore-based venture capital fund Dymon Asia Ventures, less than 0.1% of loans in the region currently originate from P2P lending sources, compared with 10% in China and 2-3% in the UK and US. There is, therefore, sufficient growth potential for the Southeast Asian P2P lending market.

Peer-to-peer lending bears risk of bad debt (The Jakarta Post), Rated: A

Despite the rising trend of peer-to-peer (P2P) lending in Indonesia, an economist believes that online-based businesses have increased risk of bad debt if the lenders ignore the importance of supervision.

The credit application mechanism in P2P lending is risky. There is no integrated costumer blacklist data-base like in the banking industry, said Samuel Aset Manajemen economist Lana Soelistianingsih said in Jakarta on Friday.

Moreover, she said P2P lending offered annual interest rates of up to 18.5 percent to investors, adding that such aggressive offers could increase the risk of business failure.

Canada

FLINKS PARTNERS WITH MERCHANT ADVANCE CAPITAL (Betakit), Rated: B

Flinks, a financial API for banks and credit unions, announced a partnership with Merchant Advance Capital, an online lender for small and medium-sized businesses.

Merchant Advance Capital partnered with Flinks to reduce loan approval time for its customers. Flinks will allow Merchant Advance Capital to connect its app directly with customers’ banks, allowing the company to validate account ownership, account balances, and transaction histories.

Authors:

George Popescu
Allen Taylor

Monday August 21 2017, Daily News Digest

Bulge Bracket Banks

News Comments Today’s main news: Prodigy Finance raises $240M in debt and equity. RateSetter withdraws from UK Peer to Peer Finance Association. OCC motions to dismiss lawsuit. Funding Circle offers manual investment in Self Selected Loans. Lufax turns profit ahead of IPO. N26 has half a million customers. Today’s main analysis: Regulatory clarity RE: Madden v. Midland; Q2 earnings season […]

Bulge Bracket Banks

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

Middle East

Africa

News Summary

United States

OCC Motion to Dismiss Regarding Conference of State Bank Supervisors Lawsuit (Crowdfund Insider), Rated: AAA

In a motion to dismiss the lawsuit, the OCC states;

“The Complaint by the Conference of State Bank Supervisors represents a fatally premature attempt to invoke the jurisdiction of this Court to remedy a speculative harm that CSBS alleges may arise from future action by the Office of the Comptroller of the Currency – action that the OCC may never take. The CSBS Complaint challenges:

(1) provisions of an OCC regulation amended in 2003 to authorize special purpose charters that have, to date, never been used to charter a bank; and

(2) a series of public OCC statements as part of an ongoing policy initiative that CSBS alleges to be a final decision by the OCC to make charters available to “nonbank” financial technology (“fintech”) companies.

CSBS’s denomination of these public statements as a “Nonbank Charter Decision,” Compl. ¶ 52, is wrong in two fundamental respects: it ignores that the proposal contemplates a form of national bank charter and that no final decision has been reached.”

Read the full memorandum here.

Student Online Lender Prodigy Finance Raises $ 240 Million in Equity and Debt (The New York Times), Rated: AAA

UK-based online lender Prodigy Finance has raised $240 million in equity and debt funding, as it seeks to speed up its expansion in the United States.

The funding round comprises of $40 million in equity led by venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode, and $200 million in a debt facility led by a global investment bank, Prodigy Finance said on Monday.

Regulatory Clarity in Sight for Madden V. Midland; Q2 Earnings Season Highlights (PeerIQ), Rated: AAA

Congress may clear up the regulatory uncertainty introduced via Madden V. Midland before year end. Representatives Gregory Meeks, (D-NY) and Patrick McHenry (R-NC) introduced Protecting Consumer’s Access to Credit Act of 2016. The bill reaffirms the “valid when made” doctrine, which holds that interest rates originated by a national banks are legal even after a loan is assigned to a third-party. Political insiders assign favorable odds to the passage of the bill due to its bipartisan support.

Research has shown that the Madden V. Midland district court ruling has “significantly reduced credit availability for riskier borrowers”. PeerIQ has also observed a significant reduction in the willingness of warehouse lenders to finance loans subject to “Madden Midland” risk.

Bulge Bracket Banks

Compared to a year ago, all of the banks have increased their focus on lending business lines as revenue from trading continues to come under pressure.

Source: PeerIQ; Bloomberg

Non-Bank Lenders & FinTech 

  • OneMain is leading the pack in YTD stock performance by a large margin. OMF has improved ROE and NIM while keeping charge-off rates to mid-single digits.
  • Except for Enova, all of the non-bank lenders increased their reserves as a % of total loans outstanding.
  • We see a trend of higher net-charge off rates and increased reserves. We believe this reflects prudent risk management and responsiveness to changing borrower behavior (e.g., stacking, greater access to credit, late stage credit cycle dynamics, etc.)
Source: PeerIQ; Bloomberg

Has Fintech Industry Growth Just Begun? (The Motley Fool), Rated: AAA

However, recent earnings releases from each of three public fintech stocks — Lending Club (NYSE:LC)OnDeck Capital (NYSE:ONDK), and Elevate Credit, Inc. (NYSE:ELVT) — show the tide may be turning. Here are three positives each company showed in the quarter.

Improving credit

While Lending Club began tightening standards well over a year ago, OnDeck did so more recently. While originations declined 19% sequentially, loss provisions also declined from 8.7% to 7.2%. That, combined with a $45 million cost-reduction plan, led to an adjusted net loss of only $1.5 million, a huge improvement over the $16 million loss in the prior-year quarter.  If not for a $3.2 million severance charge, the company would have recorded positive GAAP income.

Increasing acceptance

In Lending Club’s case, tightening credit attracted banks back to its platform in a big way. Banks funded 44% of loans in the quarter, compared with 13% in the third quarter of 2016.

Trending up

While Lending Club took a year to repair controls and rebuild investor trust, last quarter’s loan originations were up 10%, both sequentially and year-over-year. Even better, revenue was up 35% year over year, as the company was able to earn more revenue per loan.

And while OnDeck deliberately slowed down in a big way this quarter, the company still grew revenues 25% year-over-year.

Finally, while Elevate’s revenue growth slowed to 19%, this is mainly due to the rapid growth of its Elastic product, which carries a lower interest rate than its other products; however, Elastic typically has a better-quality customer, with lower chargeoff rates. Originations grew 29% year over year, which is still very healthy.

ActiveProspect Announces Partnership with LendingTree to Independently Certify Web Leads (Benzinga), Rated: A

ActiveProspect, a SaaS provider of lead acquisition solutions, is partnering with LendingTree, the nation’s leading online loan marketplace, to independently certify its web leads using ActiveProspect’s TrustedForm product.

Venture Capitalists Wary Of Online Lenders (PYMNTS), Rated: A

According to a news report in CNBC, BlueVine CEO Eyal Lifshitz said that when meeting venture capitalists in recent years, the company has had to have a good story as to why it is different from other online lenders in order to get funding — something it didn’t have to deal with three years ago.

BlueVine, which is an online lender that is focused on the small business market, raised funding last year and has secured a total of $188 million in venture capital funding since 2013.

Investors have become skeptical about online lending since early pioneers flamed out (CNBC), Rated: A

Online lending startups looking to raise money now have to answer one important question that didn’t get asked much in the past: how do avoid the fate of early pioneers like Lending Club or On Deck, which have lost nearly 80 percent of their value since going public in 2014.

According to CB Insights, the number of funding rounds in the online lending space is on pace to hit a 5-year low in 2017. The dollar amount is also expected to drop to $2 billion in 2017, less than half of the $4.4 billion the sector saw in 2015.

Kabbage raised $250 million at a reportedly higher valuation than its last round, while Prosper is reported to be raising at a valuation that’s 70 percent below its previous round. Both companies last raised in 2015.

BLOCKCHAINS, INNOVATIONS, AND INTERMEDIARIES (AllAboutAlpha), Rated: A

One investment fund that intrigues Kaal is LendingRobot, which invests in lending marketplaces such as Prosper Funding Circle and Lending Home.  What fascinates him is that its trading is automated, an algorithm based on investor risk preference. Due to blockchain technology, all transactions are a matter of public record, in compliance with best execution obligations. This facilitates the location and auditing of trades, internal investigation, and reporting to regulators.

Blockchain might very well diminish the role of banks in the asset management industry. As Kaal writes, banks charged $1.7 trillion in processing fees in 2014. But with blockchain “financial transactions can be executed instantaneously at near zero transaction costs, increasing the efficiency for businesses and individuals exponentially.”

Online loan marketplace DebtX to accept bids on nearly $ 1.1 billion in loans tied to First NBC collapse (The Advocate), Rated: A

DebtX, which operates an online marketplace for loans, plans to accept bids starting next month on nearly $1.1 billion in loans tied to First NBC Bank’s collapse.

On Sept. 12, DebtX plans to accept bids on a $117 million, single-relationship loan pool secured by energy-related assets in Louisiana. Bidding ends Sept. 29.

Data-sharing debate grows contentious as fintechs vent grievances (American Banker), Rated: A

A recently formed group representing 31 data aggregators and fintech companies, called Consumer Financial Data Rights, says banks still aren’t forking over as much data as they should be. The group is meeting with bank regulators to plead their case and trying to get consumers to petition regulators on their behalf, urging them to send a Tweet that says, “.@CFPB protect Americans’ ability to grant access to their financial information. #handsoffmyfinancialdata.”

The leaders of the CFDR accused banks of pushing bilateral agreements that restrict the types of data that will be shared and the use cases under which it can be shared. They also said large banks refuse to even talk with them about these issues. They say they would like to see the industry coalesce around a set of principles such as the European Union’s General Data Protection Rule.

Banks say they have no intention of restricting data sharing, that they want to let customers decide with whom their bank account data should be shared, and that they want to make sure that data is secure.

Marketplace Lending News Roundup – August 19 (Lend Academy), Rated: A

PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings from PeerIQ – The weekly PeerIQ newsletter delves into the recent LendingClub and OnDeck earnings.

SoFi Is Being Sued by an Employee Claiming He Was Fired for Reporting Sexual Harassmentfrom Fortune – Bad news for SoFi. A former employee is suing the company and a class action lawsuit is coming.

Daylight Transparency: A Win/Win for Lenders and Investors from eOriginal – Transparency is so important in marketplace lending and eOriginal weighs in on recent comments from Ron Suber.

Why cybercriminals like AI as much as cyberdefenders do from American Banker – Penny Crosman takes an interesting look at the competition in AI between cybersecurity and criminals.

Five Key Things To Know About LendingClub Notes from LendingClub – This week LendingClub released a paper to help retail investors understand what is important.

Original Tech helps banks offer better loan applications (TechCrunch), Rated: A

Americans apply for more than 250 million new financial products each year, but the majority of those applications are completed on paper or over the phone. A startup called Original Tech wants to change that by providing white-label software to improve loan applications completed online.

It enables borrowers to apply for loans on desktop, tablet or mobile devices without needing to go through the manual process of filling out paper applications or fax documents to the financial institution.

For lenders, Original Tech takes care of the data collection, fraud prevention and compliance enforcement. But its system is designed to work within lenders’ existing workflows and allows them to apply all their own underwriting rules.

United Kingdom

RateSetter Withdraws From the UK Peer to Peer Finance Association (Crowdfund Insider), Rated: AAA

n Friday, P2P lending platform RateSetter announced it has withdrawn from the Peer-to-Peer Finance Association (P2PFA). This news comes less than a month after the online lender was hit with a series of significant operational challenges as several large loans have struggled.

As previously reported, RateSetter hit an operational hurdle that culminated in approximately £80 million worth of loans being taken over by the platform. The online lender apparently lent £36 million to the Vehicle Trading Group Limited and the company has since fallen into administration (bankruptcy) after taking on too much debt. Additionally, £12 million was lent to an advertising company Adpod and £8.5 million of the loans are still outstanding and should not have cleared its own credit policy.

Funding Circle Stops to Offer Manual Investment in Self Selected Loans (P2P-Banking), Rated: AAA

UK p2p lending Marketplace Funding Circle announced today that from September 18th, there will be an important change to how investors can invest on the marketplace. From that date Funding Circle will withdraw the option to manually choose which businesses to lend to and which loan parts to sell. Instead Funding Circle says it will launch a significantly improved and upgraded version of existing Autobid and Autosell lending tools.

Investors will be able to choose one of two new lending options based on their personal preference. Both options will be available as a Funding Circle ISA, which Funding Circle intends to launch later this tax year.

  • Balanced: you will automatically lend to the full range of creditworthy businesses (A+ to E), aiming to achieve an attractive, stable return. This will allow you to build a balanced portfolio similar to the makeup of small businesses in the UK today. The projected return is estimated to be 7.5% per year after fees and bad debt.
  • Conservative: you will focus on lending to businesses that have been assessed as lower risk (initially A+/A) but with a lower projected return. The projected return is estimated to be 4.8% per year after fees and bad debt.
Source: P2P-Banking

The ‘finance franchise’ and fintech (Part 1) (FT Alphaville), Rated: AAA

To the authors, there are three ways finance operates through the economy: 1) credit intermediation 2) credit-multiplication and 3) credit generation.

Source: FT Alphaville

“Credit-multiplication” they note is the most familiar counter-example. This encapsulates the theory of fractional reserve banking, the idea that the banking system lends out more than it receives in investor deposits and holds only enough of the latter to handle anticipated daily withdrawals. The rest is continuously lent out.

 

 

 

If banks are free to create money from thin air, what then are the limitations?

The authors argue since credit outstanding is not fundamentally dependent upon—or, therefore, limited by— pre-accumulated investment capital, it must be limited only by investment opportunities which are viewed as potentially profitable. “In other words, credit is endogenous rather than subject to exogenously given, pre-accumulated funds.” If the opportunities are there, banks will generate the funds (on effectively maximum leverage by way of an accounting trick) to find ways to finance them.

Source: FT Alphaville

The ‘finance franchise’ and fintech (Part 2) (FT Alhpaville), Rated: A

What’s really interesting, however, is how it applies to the budding fintech sector, which aims to increase its independence from the official sector by recreating models based on loanable funds (credit intermediation) assumptions.

While the authors note it’s probably too early to decisively write off fintech, the way things are proceeding seems to support their theory. In short, they believe that if these systems are to expand beyond their peripheral place, they will have to reintegrate into the core finance franchise system eventually.

Why security is king in P2P lending (FT Adviser), Rated: A

The Peer to Peer (P2P) lending market has risen from zero, around 10 years ago, to an outstanding investment level of more than £8.7bn of loans in the UK alone.

An obvious point perhaps, but the first thing to understand about P2P platforms is that no two operate the same model. Despite residing in a busy market-place, every platform takes a different approach to security, risk assessment and its lending processes.

1) Pre-approval of loan: The checks put in place to ensure that high-quality loans are approved, where the loan can be afforded by the borrower but still recoverable in case one day it is not.

2) Post-approval of loan: The measures put in place to deal with loans defaulting and the recovery of capital in that situation.

LendingCrowd is offering both new and existing investors the chance to earn £150 cashback when they invest £2,500 or more before 31 August.Lending Crowd offers two investment products, which are both eligible for the £150 cashback offer.Both can be included within the company’s Innovative Finance ISA.The Growth Account automatically invests funds in a diversified portfolio, which offers a target rate of 6% a year (after fees and bad debt). You need a minimum of £1,000 to invest.The Growth ISA and Self-select ISA allow you to invest up to £20,000, with the target returns being tax-free. The platform also allows transfers in from existing ISAs.

Croydon is high-risk mortgage hotspot (Mortgage Finance Gazette), Rated: A

According to new research by peer to peer secured lending platform Lendy, Croydon saw a 35.6% rise in the number of high-risk mortgages, up from 309 in 2015.

Across the UK, 88,057 high-risk mortgages were taken out last year, equating to 8.1% of all home loans. The percentage of high-risk mortgages taken out in Croydon was more than double this at 16.5%.

Lendy says that lower LTVs play a big role in ensuring that risk is reduced for their investors and it offers LTVs of 70% or below on its properties.

Source: Mortgage Finance Gazette

Two alt lenders land major business-boosting deals (Business Insider), Rated: A

Two of the UK’s biggest names in small- and medium-sized business (SMB) alt lending, 

Chatbots, application-free lenders and consumer hubs – Moving the mortgage tech debate on (Mortgage Solutions), Rated: A

Advancements in mortgage technology have been made but it seems they have yet to revolutionise the mortgage process – but every one knows they will.

The ideal is a digitally joined up housing, mortgage and legal process allowing the consumer to transact in a way which is convenient to them, and in a shorter time frame – but this has yet to be achieved.

Full online integration of APIs in the UK mortgage lending market is being worked on by a handful of stakeholders, although attendees said that behind closed doors a lender is close to rolling out its application-free mortgage process.

2 discounted investment trusts for income investors (AOL), Rated: A

Investing in peer-to-peer lending is one way to improve the return on your savings, but for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform and micro-managing each debt investment, P2P Global Investments (LSE: P2P) offers an alternative route for savers to gain access to the sector.

Shares in the investment trust have gained 12% since April, after the fund manager announced a review of its performance in light of falling returns.

At a current price of 861p a share, P2P Global Investments currently trades at a dividend yield of 5.6%.

KeyBank partners with Invesco’s robo-adviser (Robo Advice News), Rated: B

Invesco, the parent company of UK-based Invesco Perpetual, is continuing to expand into robo-advice and passive investing.

Digital start-up Starling taking financial services by storm (CNBC), Rated: B

Boden founded her British fintech start-up in 2014, shortly after she left one of Ireland’s biggest financial institutions, Allied Irish Bank, where she worked as the chief operating officer.

“I started thinking about a bank that really focused on doing a couple of things well, that was all about everyday transactional banking, the daily banking business, and what (would happen) if you used the information on each transaction, to give people insight into their overall lives.”

Boden believes that the challenger bank’s smaller scale operation gives it an edge over larger players, by significantly reducing the costs of running a bank.

China

Ping An’s online lending platform Lufax turns profit ahead of IPO (Asian Review), Rated: AAA

Shenzhen-based financial conglomerate Ping An Insurance Group said Friday that its online lending operator Lufax Holdings was no longer loss-making as it prepares for an initial public offering.

Established in 2011 with the help of Shanghai municipal government, Lufax, or Shanghai Lujiazui International Financial Asset Exchange, is currently the largest peer-to-peer lending platform in mainland China in terms of outstanding loans, totaling 1.5 trillion yuan ($225 billion) as of Friday, according to industry consultant WDZJ.com.

Of Ping An’s nonstandard debts, 56.9% were exposed to infrastructure investments, followed by 27.7% to non-bank financials and 12.3% to real estate.

Compared to last year when Ping An netted 9.5 billion yuan from a restructuring, net profit of its internet finance business fell 94.7% to 420 million yuan in the first half. That represented 0.9% of the wider group’s net profit, which totaled 43.43 billion yuan in the first half, up 6.5% from a year ago.

Greg Gibb of Lufax (Lend Academy), Rated: A

Lufax has gone from a simple peer to peer lending platform that launched in 2012 to a diversified wealth management platform with over $60 billion in assets under management. They are a true success story and how Greg and his team have done this is simply fascinating.

  • How Greg, an American, ended up in China becoming the CEO of a fintech company.
  • What was the opportunity that Greg and the Ping An chairman saw that led to the founding of Lufax.
  • What they really wanted to do and why they ended up deciding to start with a P2P lending platform.

Jack Ma-backed Yunfeng leads $ 1.7 billion purchase of MassMutual Asia unit (Reuters), Rated: A

Yunfeng Financial Group (0376.HK) said it would be the main investor in a $1.7 billion acquisition of insurer MassMutual International’s Hong Kong unit – a deal that sent shares in the Jack Ma-backed finance firm soaring as much as 30 percent.

Yunfeng will own 60 percent of MassMutual Asia. The rest will be owned by other investors such as Ant Financial Services, an affiliate of billionaire Jack Ma’s Alibaba (BABA.N), as well as Singapore sovereign wealth fund GIC Private Ltd and Chinese Internet and telecoms firm SINA Corp (SINA.O).

Students failing to learn debt-control lessons (China Daily), Rated: A

In April, a sophomore in Xiamen, Fujian province, killed herself because she was unable to repay 570,000 yuan ($85,448) she had obtained via a peer-to-peer lender, according to reports in Fujian Daily.

Earlier this year, the Inner Mongolia Morning Post reported that about 900 university students in the autonomous region were cheated out of more than 9 million yuan after they signed up for a “promotion” that purported to offer iPhones for 800 yuan, rather than the usual price of about 2,000 yuan. In fact, they had unwittingly applied for loans from a peer-to-peer platform and were quickly pressured to repay the money at high rates of interest.

Although there are no nationwide statistics related to criminal incidents linked to peer-to-peer lending, a number of provinces and regions have released data that illustrate the gravity of the situation.

In May, police in Jilin province said they had handled 193 cases related to the issue, busted three gangs and detained 31 people suspected of using the system to defraud would-be recipients.

Online Automobile Leasing Platform ‘Come Use a Car’ Wins RMB 100 Series A (Marbridge Consulting), Rated: A

Tianjin-based Gongming Zhongtai International Assets Leasing, operator of online and mobile automobile leasing platform Laiyongche (literally “Come Use a Car”), has won RMB 100 mln in Series A funding, according to an announcement from CEO Lu Yuquan at a press conference in Beijing. The round was led by P2P lending platform Meili Jinrong (Meili Finance) and mobile gaming company Jinke Culture Industry (300459.SZ), with participation from Xingyi Capital and Xu Xuepeng, founder of Yuehui Capital.

Techies don’t always want to work in Hong Kong banking. Here’s why they should (efinancial careers), Rated: B

As blockchain, AI and other emerging technologies become ever more prevalent in Hong Kong finance, demand for specialist tech candidates is heating up and firms have to offer more – both financially and in terms of career development – to prospective employees.

In short, we need to build a larger financial technology talent base in Hong Kong – not just developers and engineers, but also fintech entrepreneurs and creative thinkers.

European Union

N26 now has 500,000 customers for its bank of the future (TechCrunch), Rated: AAA

Fintech startup N26 is getting more and more customers. The company reported 300,000 customers back in March. It now has 500,000 customers across Europe.

More importantly, growth seems to be accelerating as the startup announced that it was adding a thousand customers every day back in March. Now, around 1,500 customers sign up every day.

International

IVC Poised to Invest in Fintech Unicorn Transferwise (Crowdfund Insider), Rated: AAA

IVC, one of the original venture capital firms on Sand Hill Road in Silicon Valley, is poised to take a substantial stake in Fintech unicorn Transferwise. This is a according to a report by Sky News that indicated IVP would invest approximately $60 million in the young firm that is an express route to disrupt the banking industry.

Fintech Funding Roundup: Instamojo, AnyPay, Aegon, Funding Circle (Paybefore), Rated: A

Options, a provider of cloud-enabled managed services to capital markets, has received nearly $100 million in investment from New York-based private equity firm Bregal Sagemount. The money will be used for growth and platform innovations.

Instamojo, an India-based digital payments platform for SMEs, has raised undisclosed pre-Series B funding from Japanese payments company AnyPay.

Dutch financial services provider Aegon is partnering with online lending platform Funding Circle.

Australia

Loans rebound but APRA caps could limit short-term growth (Courier Mail), Rated: AAA

BUNDABERG-based Auswide has criticised how lending regulatory caps are impacting small banks, saying they will partially suppress its own loan growth in the next six months.

The comments come as the 23-branch lender reports a rise in profits and dividends.

Auswide accelerated lending in the second half, and its loan book rose 4.01 per cent for the year to $2.773 billion. That remains off industry averages of 5.4 per cent, according to Reserve Bank of Australia statistics.

Auswide profits rose from $11.7 million to $15.1 million – expenses from merger activity in fiscal 2016 were not repeated. On its preferred underlying result, earnings rose from $14 million to $15.6 million.

India

Fintech startup Capital Float raises $ 45 mn in Series C round led by Ribbit Capital (VC Circle), Rated: AAA

Bengaluru-based digital lending platform Capital Float has raised $45 million (Rs 293 crore) in its Series C round of funding led by Silicon Valley-based fintech-focussed venture capital firm Ribbit Capital.

Existing investors SAIF Partners, Sequoia India and Creation Investments also participated in the round, Capital Float said in a statement.

Finding the right balance on crowdfunding (livemint), Rated: A

There are currently two crowdfunding models that are of interest to regulators. The equity-based model allows for a stake in the venture via private placement. And peer-to-peer (P2P) lending, which falls under the Reserve Bank of India’s (RBI’s) purview, connects lenders and borrowers who may mutually agree upon either a fixed interest rate or a variable one. Both operate via third-party digital platforms.

Other benefits are less obvious. In a 2016 paper for the US government’s small business administration, Research On The Current State Of Crowdfunding: The Effect Of Crowdfunding Performance And Outside Capital, Venkat Kuppuswammy and Kathy Roth found that crowdfunding success served as proof of concept and made it easier to subsequently access capital from more traditional sources such as banks, venture capitalists and angel investors.

The immaturity of digital crowdfunding globally and the start-up sector in India mean that these come with plenty of caveats, however.

APAC

Vietnam Startup Ecosystem (Vietnam-Briefing), Rated: A

Fintech has emerged as the most attractive sector in which to invest with remarkable growth figures in 2016, having received USD$ 129 million in investments. M&A activity has also been intense lately, which contributed to the overall progress of the ecosystem. Payment still accounts for the largest pool of fintech startups. Foreign and local startups could easily break into new sectors, namely InsurTech (insurance), Wealthtech (wealth), and Regtech (regulation). Vietnam has even set up a steering committee on fintech led by the Central Bank with the purpose of supporting the State Bank of Vietnam Governor in his policies.

BSP readies rules on fintech platforms (Inquirer), Rated: A

The Bangko Sentral ng Pilipinas (BSP) is studying new digital solutions as financial technology platforms proliferate, opening up new markets and access for broader segments of society while also increasing the risk of harm to unwitting consumers and investors.

Espenilla said the BSP was considering two solutions: An API system, which streamlines the reporting requirements between the BSP and regulated entities such as banks, and an automated complaint handling portal, which establishes a direct link with customers.

Middle East

Funding squeeze hastens take-off of non-bank lending in Middle East (Reuters), Rated: AAA

Middle East investment companies are ramping up their lending to businesses, providing a lifeline for small and medium-sized firms struggling to secure finance from banks that tightened credit after a suffering rise in bad loans.

Industry participants estimate non-bank lenders in the region could provide around $1 billion over the next three to five years, including secured loans, mezzanine debt, preferred shares and convertible loans and bonds.

Africa

Sanlam buys into EasyEquities (IOL), Rated: AAA

Sanlam Investment Holdings has acquired shares in financial technology business EasyEquities.

Authors:

George Popescu
Allen Taylor

Thursday August 10 2017, Daily News Digest

Lending Club

News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA

NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.

The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.

The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.

Q2 2017: An Update from Our CIO (LendingClub), Rated: AAA

Projected investor returns are also largely unchanged from the first quarter and continue to range from approximately 4% to 9% (see below).

A few factors that influence returns on the platform1 are listed below:

  • Economic Backdrop. The American economy remains robust but growth continues to be relatively modest. The unemployment rate has changed little over the past year, measuring at 4.4% as of July 2017. Meanwhile, GDP increased by 2.6% in the second quarter of 2017.
  • Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
Source: LendingClub

Lending Club makes a surprise comeback (Business Insider), Rated: AAA

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal (Bloomberg), Rated: AAA

LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites (BNL Finance), Rated: A

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions.

PFM apps are folding as banks work them into their own apps (Tearsheet), Rated: AAA

Last week,  Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.

PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.

For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.

Chinese Stock That Rallied 4,555% Could Get the Boot From the Nasdaq (Bloomberg), Rated: A

Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.

Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.

Source: Bloomberg Markets

Installment Loan Provider Earns Top Rating from TopConsumerReviews.com (PR Web), Rated: A

TopConsumerReviews.com recently awarded their highest five-star rating to Lending Club, an industry leader among companies offering Installment Loans.

“For Installment Loans ranging from $1000 to $40,000, Lending Club provides incredible customer service with fair interest rates and fees,” according to Brian Dolezal, of TopConsumerReviews.com, LLC.

StreetShares raises $ 10.3m for “Shark Tank meets eBay” approach to P2P lending (Banking Technology), Rated: A

Alternative lending platform StreetShares raised $10.3 million in a venture round this week, writes Finovate(Banking Technology‘s sister company).

The funds come from an undisclosed investor and bring the Virginia-based company’s total funding to almost $20 million since it was founded in 2013.

Real Estate Crowdfunding Platforms Work to Find a Niche (National Real Estate Investor), Rated: A

However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.

Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.

RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.

Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.

Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.

How David Zalik Skipped High School On His Way To Becoming A Billionaire (Forbes), Rated: A

With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.

GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.

From Illinois’ woes to the state of credit: Jamie Dimon lets loose (Crain’s Chicago Business), Rated: A

Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.

What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.

Would you ever see banks getting directly into online consumer lending?

Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable

5 fintech trends disrupting retail banking (and how banks can fight back) (The Financial Brand), Rated: A

  1. Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
  2. Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
  3. Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
  4. Smart Budgeting and Personal Finance Management
  5. Digital Currencies That Don’t Require Central Banks

Fintech expert Maule to join British digital banking startup (American Banker), Rated: A

Fintech expert Sam Maule has been hired by nascent digital banking firm 11:FS to head up its expansion in North America.

Marketplace Lending Abs Fund Form D (Weekly Register), Rated: B

The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.

Online Lending Policy Institute to Host Second Annual Summit in Washington, D.C. (Markets Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.

Capital One VP Joins veteran-focused fintech firm (American Banker), Rated: B

A former Capital One executive has moved to StreetShares, an online lending and investing platform.

Heather Tuason, formerly senior vice president of small business at Capital One, is now the fintech startup’s chief product officer, it announced Tuesday.

EquityBuild Announces Master Class Webinar on Five Years to Wealth Through the Brand New Model (Benzinga), Rated: B

EquityBuild announces a new master class on the Power of Five, highlighting their new five-year investment model.

Here is the upcoming webinar master class to attend August 14, 2017:

EquityBuild Power of Five Master Class – Find out how this unique model changing the way investors view real estate. Join us for this special event here.

Labor Department delays fiduciary rule implementation date (Reuters), Rated: B

The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.

Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.

United Kingdom

LendInvest makes London Stock Exchange debut with £50m raise (Finextra), Rated: AAA

LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).

The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.

The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.

P2P Lending: MarketInvoice Loanbook Snapshot (LinkedIn), Rated: AAA

MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.

Source: Sukhwinder Shoker

MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.

Source: Sukhwinder Shoker

Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.

Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.

Meet Finimize: The fintech startup that turned a popular newsletter into a financial planning platform (Tech World), Rated: A

Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.

Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.

Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.

The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.

The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.

WiseAlpha opens up corporate bond market for investors (AltFi), Rated: A

Online lending platform WiseAlpha is adding corporate bond and loan investments to its platform.

Retail investors can now access Tesco’s £300m institutional bond that has a 4.8 per cent return.

Users can buy the debt for as little as  £100 and cash in their bonds via the secondary market on the platform. The grocers bond matures in 2042.

Six of the best alternative income ideas (IG.com), Rated: A

Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.

Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.

MARKET INSIGHT: OLD MONEY, NEW METHOD (Campden FB), Rated: A

Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:

  • attractive absolute and relative returns compared to other fixed interest instruments
  • ability to create some granular/diverse portfolios through investment in loan parts
  • transparent credit process and loan pricing
  • ability to match maturity profile to desired outcomes

At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.

How can family offices engage with marketplace lenders?

Firstly, investors need to consider the asset class and risk profile they wish to invest in.

Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.

Glint is a stealthy London fintech startup that promises to turn gold into a ‘new global currency’ (TechCrunch), Rated: A

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.

Railsbank, a new fintech startup from founder of Currencycloud, raises $ 1.2M led by Firestartr (TechCrunch), Rated: A

Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.

The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.

China

China targets mobile payments oligopoly with clearing mandate (Financial Times), Rated: AAA

China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.

Big banks on notice that they’re losing ground to China’s fintech giants (SCMP), Rated: AAA

“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.

“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”

The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.

The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.

Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.

Top3 Chinese block chain asset trading platform (the second-tier platforms) (Xing Ping She), Rated: A

First of all, how to define the Chinese second-tier platforms? We refer to the following three factors:

  1. It has been established for a long time, and there is little risk of failure for the company after a long-term market test and trials.
  2. Popular and profitable.
  3. It belong to the major currencies which are the top of the list. And it has certain dominance in a few currencies.

So, the TOP3 Chinese second-tier platforms are finally selected as:

BTC
Online date: May 2013
Website: btc38.com
Registered capital: 10 million
Office address: Shenzhen

CDC CloudCoin
Online date: April 2014
Website: yunbi.com
Registered capital: 10 million
Office address: Beijing

CHBTC
Online date: early 2013
Website:chbtc.com
Registered capital: 10 million
Office address: Zhongshan city, Guangdong province

China Commercial Credit Enters Share Exchange Agreement with Sorghum Investment Holdings Limited (Markets Insider), Rated: A

China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.

Sina Corp Establishes $ 500M Online Finance Fund To Back Chinese FinTech Firms (China Money Network), Rated: A

Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.

Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.

Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.

LendIt Lang Di Fintech Names Omega One PitchIt Competition Winner (PR Newswire), Rated: B

LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.

As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.

Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.

European Union

FinTech Group Counts on BearingPoint RegTech (BusinessWire), Rated: B

Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.

International

Fintech startup brings blockchain and cryptocurrencies to invoice finance (GT Review), Rated: A

New fintech startup Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space.

Having raised more than US$10mn in crowdfunding in just five days, the company has now started piloting its new platform, which lets firms and individuals sell or buy invoices globally.

Australia

Locked out of property market? Five better places for Millennials to put money (The Sydney Morning Herald), Rated: A

Below are five better places to put your money as a young Australian in 2017.

Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.

You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.

Women in Finance finalists revealed (TheAdviser), Rated: B

Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.

India

Just Rent, Don’t Buy (Business Today), Rated: AAA

India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.

There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.

Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).

There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”

Is our banking industry facing existential crisis from fintech boom? (The Jakarta Post), Rated: A

Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.

The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.

On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.

Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.

Asia

Globe Telecom’s Fuse to Provide Loans Powered by Mambu (Markets Insider), Rated: AAA

Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.

Mynt is increasing access to  financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.

Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.

Singaporean fintech hub Lattice80 to launch office in India (Tech Wire Asia), Rated: A

LATTICE80, Singapore’s fintech hub will be opening an India branch at the end of September, as reported by Bloombergmarking the company’s first step in expanding their global operations.

The fintech hub is planning to open offices in world’s financial capitals, especially London, New York and cities in the Middle East.

MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.

Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.

Authors:

George Popescu
Allen Taylor

Tuesday August 8 2017, Daily News Digest

LendingClub

News Comments Today’s main news: OnDeck posts quarterly adjusted profit. OnDeck expands partnership with JPMorgan Chase. More than half Wellesley borrowers are in default or behind on payments. Tencent tests credit scoring. Westpac Banking invests in zipMoney. SoftBank says Q1 profit jumped 50.1% after adding Vision Fund. Fintech investments tripled in Singapore. Today’s main analysis: LendingClub Q2 earnings. Today’s thought-provoking articles: […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Latin America

Africa

News Summary

United States

Online lender OnDeck posts surprise quarterly adjusted profit (NASDAQ), Rated: AAA

Online lender OnDeck Capital <ONDK.N> posted a surprise quarterly adjusted profit on Monday, driven by lower costs and higher interest income.

Excluding items, OnDeck earned 2 cents per share in the second quarter ended June 30, compared with the average analyst estimate of loss of 1 cent, according to Thomson Reuters I/B/E/S.

Net loss attributable to common shareholders narrowed to $1.49 million, or 2 cents per share, in the quarter, from a loss of $17.9 million, or 25 cents per share, a year earlier.

Originations fell 21.3 percent to $464.4 million.

Operating expenses fell about 6.3 percent to $44.6 million.

OnDeck Will Focus on Better Borrowers, Expanded Partnerships to Grow Originations (Bank Innovation), Rated: AAA

The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.

OnDeck Capital up more than 6% after earnings beat (Seeking Alpha), Rated: AAA

  • Adjusted EBITDA of $3.3M vs. a negative $12.4M a year earlier.
  • Full-year guidance is reiterated: Revenue of $342M-$352M, and adjusted EBITDA of $5M-$15M. Q3 revenue is seen at $82M-$86M, with adjusted EBITDA of $1M-$5M.

OnDeck announces expanded partnership with JPMorgan Chase (MarketWatch), Rated: AAA

OnDeck Capital, Inc. ONDK, +18.48% on Monday announced it had expanded a collaboration with JPMorgan Chase, JPM, -0.02% which is providing technology that runs the online lending platform.

Chase extends relationship with OnDeck (Finextra), Rated: A

JPMorgan Chase (NYSE: JPM) and OnDeck (NYSE: ONDK) today announced a contract extension to continue their collaboration on the bank’s digital small business lending product, Chase Business Quick Capital, for up to four years.

Why On Deck Capital Stock Jumped More Than 20% on Monday (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were up more than 21% as of 3:15 p.m. EDT, after the company announced a smaller net loss during the second quarter and a promising expansion in its partnership with JPMorgan Chase (NYSE:JPM). Shares of LendingClub(NYSE:LC), its primary rival in the world of online lending, rose 7%, as investors see On Deck’s recent performance as a good omen for the industry as a whole.

A focus on higher-quality borrowers seems to have relaxed investors’ worries about the company’s loan quality, a perennial concern given that the average On Deck loan carries an APR in excess of 40% per year.

Lending Club Q2 2017 Earnings – Back to Growth (Lend Academy), Rated: AAA

Lending Club’s second quarter earnings marked an important milestone for the company – a return to growth. Originations have been hovering around $1.9 billion since Q2 of last year. This quarter Lending Club announced originations of $2.15 billion for the quarter, up 10% from the prior quarter of $1.96 billion. While this is still down from their previous highs, it shows that the company is back on a growth trajectory.

Source: Lend Academy

Last quarter the company announced banks were funding 40% of loans, but that reached higher in the second quarter to 44%.

Source: Lend Academy

Borrowers

  • Achieved 10% sequential growth to over $2.1 billion in originations, driven by strong borrower demand
  • Successfully launched multiple conversion initiatives, including pricing optimization and a redesigned website
  • Improved sales and marketing efficiency by over 7% sequentially
  • Credit continues to perform in line with expectations as observed in both vintage and portfolio trendsInvestors
  • Successfully executed the first self-sponsored securitization thereby opening a new funding source, expanding the investor base with 20 new investors, and generating a new repeatable revenue stream
  • Record number of managed accounts and institutional investors participating on the platform in the quarter
  • Successfully launched new iOS mobile application for retail investors

LendingClub Shares Soar 13% on Smaller Loss (Fortune), Rated: A

Online lending platform operator LendingClub reported a smaller loss on Monday, helped by higher net interest income and a drop in expenses.

Shares of the company (LC, +12.86%) were up 13.2% at $5.90 in after-hours trading.

LendingClub shares rise 8 percent on positive outlook, higher revenue (Reuters), Rated: A

Online lender LendingClub Corp (LC.N) raised its earnings outlook on Monday after reporting the second-highest quarterly revenue in its history and a drop in costs, sending shares up nearly 8 percent.

LendingClub now expects full-year total net revenue to be in the range of $585 million to $600 million, compared with its earlier forecast of $575 million to $595 million.

Shares of the company, which connects consumers looking for loans with individual or institutional investors such as banks through its website, were up 7.8 percent at $5.46 in after-hours trading.

Online lenders upbeat about turnaround progress, but worries linger (Today Online), Rated: A

LendingClub Corp <LC.N> and OnDeck Capital Inc <ONDK.N> surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.

OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.

Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.

Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.

Online Lenders Clear a Low Bar—Higher Ones Lie Ahead (WSJ), Rated: AAA

The online lending industry regained its footing in the second quarter, more than a year after it was knocked off-balance by severe disruptions in the loan marketplace. But investors’ sky-high hopes for the sector may have been lowered permanently.

Investors also were relieved that On Deck reiterated it would turn profitable later this year. Shares rose a sharp 18.5% Monday, but they fetch only about a fourth of their December 2014 IPO price, a sign of just how much the hype around these lenders has deflated.

Crucially, On Deck has moved on from funding loans through an online marketplace, the aspect of its business model that was truly disruptive. It now funds the vast majority through its own balance sheet, making On Deck more like an ordinary bank.

Both companies have to worry about rising competition. Innovative payment companies like Square and PayPal are extending more microloans to their merchant customers. Meanwhile, giants of finance like Goldman Sachs are extending more unsecured personal loans, which is LendingClub’s sweet spot.

Fintech Firm Fiserv Raises Offer for Monitise to $ 98 Million (The New York Times), Rated: A

U.S. financial technology provider Fiserv made an improved offer for Monitise worth about 75 million pounds ($98 million) on Monday, hoping to secure backing from the British financial services technology group’s investors.

Fiserv’s earlier offer, which valued the group at about 70 million pounds, drew criticism from Monitise’s investors led by Cavendish Asset Management, for being too low, given that the British group was worth over 1 billion pounds three year ago.

Fiserv’s final offer of 3.1 pence in cash per share represents a premium of 34.8 percent over Monitise’s closing price on June 12, the last before the initial offer was made.

Banco Santander, Monitise’s top shareholder with a 4.67 percent stake, had submitted a letter of intent to back the deal, as had Visa Inc, a large customer and investor with a 2.41 percent stake.

LendingRobot Series Second Quarter Report (LendingRobot), Rated: A

LendingRobot Series finished the second quarter with a healthy YTD aggregated return of 2.7%. Each Series’ return and portfolio health is in line with projections. Since April 1st, LendingRobot Series has added over 2,800 loans to its portfolio, more than doubling the number of loans held in each series.

Source: LendingRobot

 

Legislative Update 161 (Experian Email), Rated: A

Highlights this issue:

  • On July 10, the CFPB published a final rule prohibiting the use of mandatory predispute arbitration clauses that prevent class action lawsuits in consumer contracts for a wide array of financial products. The final rule was published in the Federal Register on July 19, and will become effective 60 days after that date, or September 18. All consumer contracts with arbitration clauses will need to comply with the rule within 180 days of the effective date, which will be March 19, 2018.
  • The House of Representatives is working to pass 12 appropriations bills by September 30 to fund federal agencies for the Fiscal Year 2018. The House Appropriations Committee passed the spending bill for financial regulatory agencies on July 13. The measure included several provisions important to Experian and our clients.
  • On July 19, Representatives Patrick McHenry (R-N.C.) and Gregory Meeks (DNY) introduced the Protecting Consumers Access to Credit Act. The bill would codify the legal precedent under federal banking laws that preempts a loan’s interest as valid when made.
  • Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the rule issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.

Read the full update here.

4 Reasons Online Lenders Are Innovating With Purchasing Cards (Entrepreneur), Rated: A

In recent years, Kabbage and others have stepped up to introduce a purchasing card product to their borrowers, and with their early success, many lenders are now following suit for the following four reasons:

  1. Staying on top of the customer’s mind
  2. Speaking the language of large corporate partner targets
  3. Underwriting use of funds
  4. Revenue sharing

New Financial Technology Upgrades Bank’s Credit Review Process (PayNet Email), Rated: A

Enables Banks To Review All Credits and Focus on the Highest Risks

The real challenge is convincing bank management that they do not have to apply the same credit review process to the entire portfolio.  Adopting different processes based upon exposure size and measured risk (APD for example) should be the goal of every bank.  In other words, focus credit review efforts to those accounts that represent the greatest risk to the bank – and that is what you are hoping to do with your credit review process.

Conducting credit reviews are a “waste of time” in most cases because nothing has changed. What form that documentation takes is where PayNet can be most helpful to the prospect.

PayNet is introducing PayNet Credit Review Express, a risk management tool which streamlines the credit review process making credit review easier and less costly.

Credit Review Express assesses the credit risk of each C&I borrower each month. Banks can assign their definition of risk from delinquency to probability of default to assign high, medium or low risk to each borrower. Currently, PayNet sees less than 2% of C&I borrowers as high risk credits. Other features include automated action steps (such as Watch, Restructure, Work-out) and a customized dashboard to monitor and track activity.

FDIC defends right to charter new banks against OCC criticism (American Banker), Rated: A

The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own.

Rumour mill churns in US online lending sector (AltFi), Rated: A

Whispers abound of a major financing round, an acquisition and an IPO within the US online lending space.

Perhaps chief among the rumours was the suggestion that SoFi may at last be on the brink of an IPO that was first mooted by CEO Mike Cagney in 2014.

Meanwhile, SoftBank continued to build on its portfolio-for-the-future with a $250m equity investment in small business lending fintech Kabbage.

Cities where student loan borrowers struggle with debt the most (Credible), Rated: A

So it’s important for borrowers, especially recent grads, to think about the best places to live — the cities in which they’re not only likely to find a well-paying job, but also where rents and other living expenses aren’t so exorbitant so as to add to their pile of debt.

5 cities where student loans borrowers struggle the most with debt:

  • 1. San Jose, California
  • 2. Fort Worth, Texas
  • 3. Boston, Massachusetts
  • 4. Los Angeles, California
  • 5. Denver, Colorado

5 cities where student loans borrowers struggle the least with debt:

  • 1. Dallas, TX
  • 2. Jacksonville, FL
  • 3. Houston, TX
  • 4. Columbus, OH
  • 5. Austin, TX

The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs.

Source: Credible

 

Marketplace Lending Explained (WealthManagement.com), Rated: A

Marketplace lending has grown by nearly 150 percent on a compound annual basis for the last half-decade. Strong growth and real longevity mean that most advisors have to consider the role that marketplace lending plays in their clients’ portfolios.

Source: WealthManagement.com

Refinancing high-rate credit card debt or other hard-money-type loans among high-quality borrowers via a marketplace lender is sensible and provides good value to all parties.

As part of a fixed income allocation, what are the risks in marketplace loans? There is the credit risk of the borrower first and foremost—here the asset can be seen as clearly pro-cyclical; in other words, as the economy improves, the asset strengthens. Correspondingly, as the economy weakens, the credit of the borrower will weaken. Additionally, there has recently been some weakness in consumer credit, primarily in auto loans and credit card defaults, though these have been largely limited to the subprime aspects of these loan categories.

United Kingdom

The Growing Alternative Finance Industry (Business Zone), Rated: AAA

The latest equity crowdfunding statistics released by OFF3R last month revealed that the first half of 2017 was the strongest 6 months for equity crowdfunding to date.

Six of the leading equity crowdfunding platforms that form the OFF3R Index raised nearly £130M in 2017 for UK private companies. This is £2M above the previous half yearly record that was reached back in the second half of 2015. March 2017, where Over £40 million was raised, buoyed the latest data and the period as a whole was characterised by some very large fundraises from Q1 2017.

The data also revealed that peer to peer lendinglevels continue to rise in the UK. The peer to peer lending statistics showed that over £1.8 billion was lent in the first half of 2017 by the nine platforms that make up the OFF3R Index. This is an increase of over £350 million from the previous half year period at the end of 2016.

The data also revealed that Assetz Capital had a record breaking month in June 2017. The total amount lent of over £30 million by the platform was higher than any previous period since the OFF3R Index began.

Toxic loans blight property peer-to-peer lender Wellesley – with more than half its borrowers behind on payments or in default (This is Money), Rated: AAA

More than half of the customers of an internet loan firm run by an aristocratic financier are behind on their payments or in default, the Mail can reveal.

Wellesley, a peer-to-peer lender which allows property developers to borrow cash from savers, is grappling with losses on its loan book.

Online lender Tandem acquires Harrods Bank in bid to expand services (Belfast Telegraph), Rated: A

Start-up lender Tandem has snapped up Harrods Bank in a deal that will bring it closer to launching a savings account.

The undisclosed deal will hand the online-only lender £80 million of additional capital and enable it to regain its banking licence , if it wins regulatory backing.

The institutional investor selling down its stake in VPC Speciality Lending (AltFi), Rated: A

Old Mutual, a sigificant shareholder in the £351m VPC Speciality Lending fund, has further reduced its holding in the closed ended portfolio following previous reductions in exposure earlier in the year.

Its holding in the fund fell below 6 per cent back in March 2017, now it has sold more shares with its stake now less than 4.99 per cent, according to regulatory filings.

VC firm behind Zopa among judges at PitchIt funding competition (P2P Finance News), Rated: B

A VENTURE capital (VC) firm that backed Zopa in its early days has been named among judges for the second annual PitchIt Europe competition.

Rob Moffat, partner at Balderton Capital, an early Zopa backer, will be one of the VC judges alongside Seedcamp’s Reshma Sohoni, Blenheim Chalcot’s Dan Cobley and managing director of CommerzVentures Patrick Meisberger.

China

Tencent credit check takes mobile payments battle to Alibaba (Financial Times), Rated: AAA

Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market.

Ant Financial, Alibaba’s payments affiliate, launched its Sesame Credit two years ago, parlaying its data on consumers into a measure of their trustworthiness, providing comfort for small businesses and consumers alike.

Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country.

Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.

Top 100 List of Chinese Internet firms in 2017: Tencent surpassed Alibaba to become NO.1, and Letv was Out of the List. (Xing Ping She), Rated: AAA

Recently, Internet Society of China (ISA) and the information center of Industry and Information Technology Ministry Jointly issued the list of “China’s Top 100 Internet Companies in 2017”. For this time, Tencent overtook Alibaba to become the No.1. Tencent, Alibaba and Baidu were still the top three for five consecutive years, while Letv was out of the list.

The top 10 of the list were:

  • No.1 Tencent
  • No.2 Alibaba
  • No.3 Baidu
  • No.4 Jingdong
  • No.5 NetEase
  • No.6 Sina
  • No.7 Sohu
  • No.8 Meituan
  • No.9 Ctrip
  • No.10 360

The list of “China’s top 100 Internet Companies” has been published every year since 2013 and has been published five times so far.The evaluation index combines seven core indicators of enterprise scale, profitability, innovation, growth, influence and social responsibility.

Central bank to regulate rapidly growing fintech (China Daily), Rated: AAA

In a report released last weekend, the People’s Bank of China said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment or MPA.

The aim is to prevent cyclical risks and cross-market risk transmission, it said.

Analysts said this is the first time that the PBOC said it will include fintech businesses in its MPA.

With $ 3.58 bn in newly increased loan balance, Weli Dai becomes the largest microcredit platform in China (Xing Ping She), Rated: A

On 7th August, a Webank staff said in WeChat Moments that the loan balance of Weli Dai reached a milestone of over 100 billion RMB (equivalent to $14.91 bn). In a speech at the LendIt on July 16, Fang Zhengyu, the director of retail credit section in Webank, revealed that the loan balance of Weli Dai was $1.13 bn. And it has increased by $3.58 bn within just 22 days. What an amazing growth!

Weli Dai is focused on providing a cash loans product, with the loans amount from ¥500 to ¥300,000, and is operated in pure online pattern. With its white list invitation system, Weli Dai identifies the target customers effectively. The loan period is flexible from one day to twenty months, which makes users borrow and repay money at any time. Many factors contributed to the performance of Webank today, the most important is that Webank developed its business in the huge customer base of QQ and WeChat. Besides, Webank has built partnerships with nearly 40 banks for jointly making loans.

Hong Kong startup close to US$ 500mil valuation (The Star), Rated: A

TNG FinTech Group Inc, a Hong Kong-based digital wallet operator founded in 2013, is poised to close a funding round and is targeting a valuation of about US$500mil, according to a person familiar with the matter.

It has attracted almost US$60mil in the series A round from investors including a Beijing-based private equity fund, said the person, who asked not to be named discussing private deliberations.

TNG, which offers global money transfers, foreign-exchange transactions and bill payments, expects to be profitable this year and is targeting a listing in either New York or Hong Kong by 2019, the person said.

Jeffrey Chen of ZhongAn Insurance (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Jin (Jeffrey) Chen, the CEO of ZhongAn Insurance. I sat down with him when I was in Shanghai recently for Lang Di Fintech (LendIt’s Chinese event) and we conducted this interview with the assistance of his translator.

People’s Bank of China Has Fintech on Its Mind (Fox Business), Rated: A

The People’s Bank of China said in a report that it is considering expanding its risk-assessment system beyond banks to include major online financial businesses. Last month, it reached agreement with 45 nonbank financial firms– including payment systems affiliated with internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd.–on joining a new payment-clearing platform called Wanglian, according to listed-company documents.

This effectively gives the PBOC a clearer view of payments, enhancing regulation, said Tencent, which owns the TenPay payment system.

European Union

Fellow Finance Adds Invoice Financing (P2P-Banking), Rated: A

Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.

In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.

Balderton Capital on European Fintech (Stitcher), Rated: A

Rob Moffat is a Partner at Balderton Capital, a London-based venture capital firm that has invested in fintech businesses including GoCardless, Revolut, Crowdcube, Nutmeg, Seedcamp, ComplyAdvantage, Wonga, Zopa and more. Prior to joining Balderton, Rob worked at Bain & Company and Google. Rob holds degrees from Cambridge and INSEAD.

Listen to the podcast here.

International

Senate To Mull Financial Choice Act, UK Officials Look For Tighter Controls (PYMNTS), Rated: A

As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate.

In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”

Visa And The QR Code Evolution/Revolution (PYMNTS), Rated: A

As it turns out, putting that spec on the shelf helped to inform the development of the EMVCo QR code standard, which was released yesterday into a payments ecosystem that looks at them as anything but uninteresting.

China is a prime example as, over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country — and leapfrogged credit and debit cards — to become Chinese consumers’ preferred alternative for payment. There are $5.5 trillion worth of mobile payments made in China per year, the vast, vast majority of which are handled via QR code.

But perhaps most striking is India and its government’s November 2016 decision to move toward a cashless society. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.

Getting To Scale

Visa is currently developing mVisa as a worldwide solution. The key to scale, Shrauger told Webster, is making it useful and accessible for their two client groups — merchants and their customers.

Australia

Westpac Banking Invests $ 40 Million into zipMoney (Crowdfund Insider), Rated: AAA

zipMoney (ASX:ZML) has announced a $40 million strategic investment from Westpac Banking (ASX:WBC). The investment was paired with an agreement for the two companies to explore the integration of Zip’s products and services into Westpac’s network across Australia. The investment will be by subscription of ordinary equity of 49,382,716 shares at a price of $0.81 per share. This represents a 14.1% premium over the close of $0.71 on August 4th.

India

How technology is helping investors achieve their financial aspirations (Financial Express), Rated: A

Most Indians save first and think of spending later. However, when it comes time for them to plan their expenses, they end up relying on mental estimates of their financial position. As a result, most people are never confident of 1) how much to save and 2) whether they can reach their financial aspirations with their current investment plan. This is especially true for young professionals who want to save for a secure future but also want a more fulfilling life experience. What is required is financial advice that delivers the answers to these questions in a clear and quantified way.

A solution to these issues has come from the field of artificial intelligence. Cognitive technologies is a branch of artificial intelligence that deals with the application of computers towards tasks traditionally performed by people. The aim of this process is to design a software solution that has comprehensive and detailed instructions, that enables it to do the same work that a person can. The benefits of this approach are that the same work can be done at a much faster pace, at a higher accuracy and at a lower cost.

Asia

Japan’s SoftBank says Q1 profit jumps 50.1% after inclusion of Vision Fund (CNBC), Rated: AAA

Japan’s SoftBank Group Corp on Monday reported a 50.1 percent rise in first-quarter operating profit, after the company included Vision Fund, the world’s largest private equity fund, as a new reportable segment and booked a valuation gain.

The internet and telecoms giant said profit for the quarter through June increased to 479.2 billion yen ($4.33 billion).

Fintech investments tripled in Singapore (The Star), Rated: AAA

GLOBAL investment in financial technology (fintech) firms more than doubled in the second quarter of the year, compared with the first quarter, to US$8.4bil (S$11.4bil) across 293 deals, KPMG said in a recent report.

Investment in fintech in Singapore more than tripled to US$61.5mil (S$83.3mil), although there were only four deals, compared with seven the quarter before.

Indonesian P2P Lending Platform UangTeman Secures Million During Series A Funding Round Led By K2 Venture Capital (Crowdfund Insider), Rated: A

On Monday, Indonesia-based peer-to-peer lending platform UangTeman announced it successfully secured $12 million during its Series A funding round, which was led by K2 Venture Capital, with participation from STI Financial Group and Draper Associates.

Middle East

UAE Authorities Plan SMB Crowdfunding Framework (PYMNTS), Rated: AAA

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market, news reports on Sunday (Aug. 6) said.

Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85 percent of all UAE companies. In Dubai, that number is even higher, at nearly 95 percent of all businesses, reports added.

Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70 percent of small business loan applications in the UAE are rejected by traditional banks, despite efforts from the national government and the Central Bank of the UAE to promote SMB financing.

Latin America

Mexican fund invests in peer-to-peer lending network (Latin Lawyer), Rated: A

Greenberg Traurig SC in Mexico City has helped Mexican venture capital fund Ignia invest in peer-to-peer lending network Afluenta.

Africa

Why African fintech startups are becoming even more attractive for investors (Quartz), Rated: AAA

Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital.

Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.

In more advanced economies, fintech startups are focused on disrupting the traditional banking industry by changing how people access financial services. But in most parts of sub Saharan Africa, that’s not the case. In fact, fintech startups are typically creating products and services to plug many of the gaps which currently exist.

Indeed, as of 2014, only 34% of adults in sub Saharan Africa had bank accounts. Given the sheer size of the market which remains under-served, fintech startups are presented with a huge opportunity. And for investors, all that represents a major upside.

Authors:

George Popescu
Allen Taylor

 

Thursday April 20 2017, Daily News Digest

real estate technology

News Comments Today’s main news: California SC finds arbitration agreement waiver unenforceable. BondMason first P2P provider to launch SIPP. China’s internet finance thrives as fraud fades. Marvelstone plans robo-advisor for family offices. Today’s main analysis: Real estate tech deals tick up. Today’s thought-provoking articles: 5 areas of fintech attracting investment. UK still fintech unicorn capital of Europe. Millennials favor search […]

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News Comments

United States

United Kingdom

European Union

Australia

China

APAC

News Summary

United States

California Supreme Court Finds Arbitration Agreement Waiver of ‘Public Right’ Unenforceable (JD Supra), Rated: AAA

On April 6, the California Supreme Court issued a unanimous opinion in McGill v. Citibank, finding that a pre-dispute arbitration agreement was unenforceable to the extent it required the plaintiff to waive her right to seek public injunctive relief. According to the court, the right to pursue a public injunction constitutes an “unwaivable public right” under California law. Therefore, “a provision in any contract ― even a contract that has no arbitration provision ― that purports to waive, in all fora, the statutory right to seek public injunctive relief . . . is invalid and unenforceable under California law.”

The California court further explained that its partial unenforceability finding is consistent with the U.S. Supreme Court’s decision in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). In that case, the Court stated that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitrable, rather than a judicial forum.”

The court also acknowledged, but found no reason to address, the plaintiff’s related claim based on what is known under California law as the “Broughton-Cruz” rule, asserting that a request for a public injunction cannot be decided in arbitration. Finally, the decision remanded the case to the California Court of Appeals to consider ― if either party should raise the issue ― the question of whether the rest of the arbitration agreement remains enforceable in light of language contained in the most recent version of the underlying account agreement stating that, “if any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall not remain in force.”

Pepper Points

  • The decision of the California Supreme Court in McGill v. Citibank will likely be appealed.
  • In light of this decision, providers of consumer products and services should review their existing arbitration agreements to determine whether the consumer’s ability to pursue a public injunction or other “public rights” is completely foreclosed.
  • McGill v. Citibank also highlights the risks of including language in an arbitration agreement (or in any contract) stating that the agreement will be invalid if any portion of the agreement is deemed invalid or unenforceable. Given the impossibility of predicting how courts may interpret even well-settled questions of law, standard severability language is always preferable unless different language is specifically mandated.

Five areas of fintech that are attracting investment (Financial Times), Rated: AAA

At the same time, some of the steam has come out of the sector. Overall investment and merger and acquisition activity in fintech almost halved from a record high of $46.7bn in 2015 to only $24.7bn last year, according to KPMG.

Another negative factor was the governance scandal last year at Lending Club, the biggest online lender in the US, combined with disappointing performances by some of its rivals, which turned investors off peer-to-peer lending.

China

Total fintech investment in Asia inched up to a new record of $8.6bn last year, although the number of deals fell by more than 8 per cent. More than half the region’s total fintech investment came from one deal: Ant Financial’s $4.5bn funding round.

Artificial intelligence

The launch of voice-activated assistants such as Amazon Alexa and Google Voice has opened up possibilities for making online banking easier for customers. Banks such as Capital One have already latched on to this trend.

Cyber security

Cyber security shot to the top of the boardroom agenda for banks after one of the biggest bank robberies in history was carried out by cyber thieves on the Bangladesh central bank via the Swift payments system in February 2016. The crooks made off with $81m that was on deposit at the US Federal Reserve.

Blockchain

Most big financial groups remain convinced of the potential for blockchain to revolutionise parts of their industry and several central banks are examining the potential for using the technology to create digital currencies. Venture capital investment in blockchain companies rose by a fifth to $544m last year, according to KPMG.

Insurtech

The insurance industry has been slower than other areas of finance to wake up to the digital disruption at its door. But recently start-ups such as So-sure, Friendsurance, Lemonade, Guevara and Brolly have emerged with plans to transform the sector. Venture capital investment in insurance technology companies doubled last year to almost $1.2bn, according to KPMG.

Real Estate Tech Deals Tick Up, But Still Well Below Peak (CB Insights), Rated: AAA

2016 was a banner year for real estate tech with over $2.6B in funding to the category across 277 deals. At the current run rate, 2017 could very well reach another consecutive funding high, even as deals are on track to come in slightly below last year’s total.

So far this year, real estate tech companies have received $733M across 61 deals.  At the current run-rate investment activity is on track to reach $2.9B invested across 247 deals.

On a quarterly basis, deals have materially declined since Q3’16.

Funding, on the other hand, has increased in each of the last three quarters and Q1’17 received the second-largest quarterly funding total ever, behind Q2’16.

Why I Don’t Believe in the Hybrid Advice Model (Lend Academy), Rated: A

On paper, it looks pretty good: let the robot do the simpler stuff, like a modern-portfolio-theory allocation between a few ETFs, and have a human being intervene to provide more sophisticated and personalized advice.

In practice, I think it’s nonsense. If you believe the market is truly efficient, then there’s no point in using an advisor, robot or human. Just invest in a broad market ETF and be done with it (except for tax harvesting).

If you think the market is efficient-ish, then low cost optimization is the solution. Go robot. If you think you need an active manager, you should read the trove of statistical analysis that demonstrate you’re simply paying for someone’s yacht. Indexes beat stockpickers [92% of time]…

It does make sense for robo-advisors to move to the hybrid model, since it allows them to differentiate and de-commoditize their service, but for their clients, not so much.

Machine learning algorithms have become so good in the last 10 years, that any number-crunching and quantitative decisions a smart but junior employee can do, the machine will do better, faster, and cheaper.

Wealthfront Now Offers Securities-Based Lending (Financial Advisor IQ), Rated: A

As its first move into lending, robo-advice provider Wealthfront has revealed it will let clients borrow money against their investments, Reuters reports.

Along with robo rival Betterment, the robo-advisor has increased competition in the wealth management space against the likes of wirehouses Merrill Lynch and Morgan Stanley, brokerages like Charles Schwab and even fund houses with direct-to-consumer offerings like Vanguard.

Investors with at least $100,000 with Wealthfront can now borrow up to 30% of their balance for loans for anything except purchasing more investments on the firm’s platform, the company announced Wednesday.

Reuters reports loans will cost between 3.25% and 4.5%, and any money a client deposits into their account after taking out a loan will pay off the balance rather than investments.

Edward Jones partners with SixThirty to support financial technology startups (PR Newswire), Rated: A

Financial services firm Edward Jones today announced a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. Backed by the St. Louis Regional Chamber, SixThirty was founded in 2013 and to date has funded more than 25 startups across the globe.

As part of the partnership with SixThirty, Frank LaQuinta, a general partner with Edward Jones, has joined the organization’s Investment Committee which evaluates the investment pipeline and selects FinTech startups that SixThirty invests in.

Pi Capital Advises Money360 on $ 250 million South Korean Financing Vehicle (Yahoo! Finance), Rated: A

Pi Capital International LLC (“Pi Capital”) is pleased to announce that it was the exclusive financial advisor and placement agent to Money360, Inc. for a structured debt facility of up to $250 million. The financing vehicle is designed to allow Money360 to employ funding as it provides commercial real estate loans to its U.S. client base. The fund provides Korean investors with a short-duration, high-yield fixed-income instrument.

“The fund raise by Pi Capital will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors’ CEO. “We believe this gives us a competitive advantage with an anticipated $250 million investment from one of South Korea’s most reputable financial institutions.”

ApplePie Capital Announces Appointment of Chief Development Officer and Franchise Finance Company Acquisition (Yahoo! Finance), Rated: A

ApplePie Capital, the first online lender solely dedicated to the franchise industry, today announced the appointment of franchise industry veteran Ronald Feldman as chief development officer, as well as the acquisition of Funding Solutions, LLC, a well-established national franchise lending consultancy that specializes in SBA, conventional and equipment finance loans. Feldman and Funding Solutions’ managing partner Randy Jones will join ApplePie’s leadership team.

These additions position ApplePie’s financial platform to exponentially expand upon its hallmarks of speed, flexibility and efficiency with new product options, an expanded network of lending sources and an extraordinary wealth of franchise finance expertise for its growing list of franchisor partners. Currently, ApplePie serves more than 40 franchisors including Orangetheory Fitness, Jimmy John’s, Jersey Mike’s and Marco’s Pizza.

Responsible for growing ApplePie’s brand portfolio and contributing to product strategy, Ronald Feldman comes to the company with more than 20 years of experience in franchise leadership and franchise financing.  He previously served as chief development officer at FranData, the industry leader in market research, and as a principal and co-founder of Franchise America Finance (FAF) and The Siegel Financial Group. Feldman was also an early franchisee of The Goddard School system. As an active advocate of the franchising business model, Feldman currently serves the International Franchise Association (IFA) as chair of the Supplier Forum Advisory Board and sits on both the Board of Directors and the Executive Committee of the association.  Feldman was awarded the Sid Feltenstein MVP Award for service to the IFA’s Political Action Committee (FRANPAC) in 2013.

Why More Millennials Would Rather Visit The Dentist Than Listen To Banks (Forbes), Rated: A

Unfortunately, some Millennial stereotypes are rooted in fact. A 2015 PWC survey showed that only 24% of us have basic financial knowledge, and even so, only 27% of us seek financial advice on saving and investing.

When it comes to jobs, we’re not the deadbeats that people assume. In fact, a 2015 Deloitte report found that 54% of Millennials had started or had planned to start their own businesses by year-end. Although we may work differently than generations past, many of us are passionate, entrepreneurial and looking to make a difference.

“Advisors need to understand how truly connected this new generation is to each other and to information.” When it comes to trusting a financial advisor, Kamine highlights this outsider oversight as a road block.

Millennials currently represent a meaningful fraction of U.S. wealth that will grow as baby boomers continue to pass down an astounding $30 trillion over the next 30 years. When this transfer of wealth happens, an estimated 66% of Millennials will fire their parents’ financial advisor, according to InvestmentNews Data.

This year, 86% of Millennials said they are interested in socially responsible investing, according to Morgan Stanley.

The Millennial Disruption Index reports 71% of us would rather go to the dentist than listen to what banks tell us. In our financial planning, we have shorter-term goals that we’re trying to align with the things we care about.

With an average age of 51, many advisors still build financial plans based on their view of a traditional life cycle with set ages for when we start a family, buy a house, climb the corporate ladder and retire. But their view is not our reality. Kamine adds, “Financial advice has been like a structured box without much creativity or understanding of the individual. Advisors need to become more dynamic because we’re revolting against structure. I’ve told my advisors I don’t envision buying a house for at least the next five years. And I’m definitely not focused on planning for retirement 40 to 50 years from now.”

Miami fintech company DadeSystems receives $ 2 million in funding (Miami Herald), Rated: A

DadeSystems, a Miami-based provider of account receivable automation solutions, raised $2 million in funding to accelerate its growth from Miami early-stage venture firm Ocean Azul Partners.

New GAO Study Examines Fintech Industry Regulation (Banking Journal), Rated: B

The report, the first in a series on regulation in the fintech industry, focuses specifically on marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger (also known as blockchain) technology.

While the GAO did not issue any recommendations in the report, it noted that regulation of these four subsectors was varied depending on the types of products or services offered and the way in which they are delivered to consumers.

College Ave Student Loans Kicks off the Naked Financial Truth Digital Tour Featuring Financial Advice for Parents and Students (BusinessWire), Rated: B

College Ave Student Loans, the leading next-generation student loan fintech lender, has teamed up with America’s #1 College Life Expert Harlan Cohen to help families get comfortable with the uncomfortable when it comes to college and money. Hosted by Harlan Cohen, author of The Naked Roommate, the Naked Financial Truth Digital Tour will feature a series of free webinars and videos focused on financial advice, strategies and tips to help parents and students plan for post-secondary education.

The first webinar, “The 7 Biggest Financial Mistakes College Students Make (And How Parents Can Help)” will be held on Tuesday, April 25 at 7 p.m. ET. Registration for the webinar is free and available online at

Ben Franklin’s Fintech Accelerator is First of its Kind in the Region. These 8 Startups Made the Cut (Biz Journals), Rated: B

These eight companies — which are required to have a presence in the region to receive an investment — will begin the 12-week accelerator on April 24, meeting with mentors and advisors selected to help guide them toward growth and fundings. They run the gamut of the financial industry, from creating data visualizations of personal assets to a student loan repayment benefit program. Four focus on putting financial technology to use solving social issues.

  • Asset-Map (Philadelphia)
  • Bright Idea Energy (Philadelphia)
  • College Affordability (Wynnewood)
  • Factury (Silicon Valley and New York City)
  • FinPay (King of Prussia)
  • FixList (Philadelphia)
  • NeedsList (Philadelphia)
  • PeopleJoy (Philadelphia)

RayJay Adds Real-Time Client Updates to Planning Tools (Financial Advisor IQ), Rated: B

In the next several weeks Raymond James is setting its sights on rolling out a revamped suite of “longevity” planning tools. The updated software comes with the kinds of bells and whistles that advisors might expect from a nearly five-year-old package – a “new look and feel” as well as a “more conversational design,” as company execs put it.

Other notable enhancements, they say, include more flexibility for analyzing portfolio return patterns and capabilities allowing real-time updates as clients’ household budgets and retirement goals change over time.

TAMARACK IMPLEMENTS ITS SALESFORCE.COM LEASE/LOAN ORIGINATOR FOR CHANNEL PARTNERS CAPITAL (NEF Association), Rated: B

Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has added Channel Partners Capital as its newest client to utilize Tamarack’s Lease/Loan Origination Accelerator on Salesforce.

Channel Partners, a leading provider of small business working capital loans, will benefit from added flexibility, streamlined operations and enhanced audit controls, as a result of using Tamarack’s Lease/Loan Origination Accelerator on Salesforce.

Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues,increase throughput of loans without additional head count and customize notifications from lead generation through to funding.

United Kingdom

UK is capital of Europe for fintech unicorns (The Telegraph), Rated: AAA

The UK dominates the European financial technology industry, with figures showing it boasts more billion-dollar fintech companies than the rest of the continent put together.

Britain houses four fintech “unicorns” – companies valued at $1bn (£780m) or more – with a combined valuation of $18.5bn, according to a report by the technology investment bank GP Bullhound.

This compares to two in the rest of Europe, which are worth $4.6bn between them.

Globally, fintech investment grew slightly to $13.6bn, although there was a decrease in the number of investments from 942 to 840.

BondMason is first P2P provider to launch a SIPP product (AltFi), Rated: AAA

BondMason has become the first peer-to-peer service provider to launch a self-invested personal pension (SIPP) product. The service aims to offer investors a flexible and tax-efficient way to save for retirement.

The new retirement product, which selects loans across P2P lending platforms, will grant UK savers exposure to higher-return assets than traditional pension savings products. Starting from a minimum investment of £5,000.

Just Google it! Millennials favour search engines over financial advice (P2P Finance News), Rated: AAA

MILLENNIALS are favouring search engines over professional financial advice when it comes to managing their own money, research claims.

A poll of more than 2,000 adults by Zurich UK claims 15 per cent of millennials, referring to those aged 18-34, are turning to search engines such as Google instead of seeking professional financial advice, more than any other age group.

Only three per cent of 35-44 year olds and nine per cent of those aged 45-54 and over 55 respectively, opt for web-based information.

Asked why they eschew professional help, one in five millennials cited confidence in their ability to sort their own financial futures as a reason for not initially seeking professional help, while 37 per cent felt they do not earn enough to need to speak to a financial adviser, and almost a quarter said they were too young.

Loan searches on the internet ‘may affect credit rating’ (BBC), Rated: B

High Street bank TSB said some loan providers make a “hard mark” on credit files when someone asks for a loan price or quote.

TSB chief executive Paul Pester said: “We estimate that consumers are losing out by as much as £400m each year, which is going straight into the pockets of aggressive loans providers. It is time the industry comes clean on these costly underhand tactics.”

P2P lending is fast becoming the go-to option (Bridging and Commercial), Rated: B

P2P lending offers an innovative funding option for businesses – including developers – and is fast becoming the go-to option.

It’s essential that the development finance sector stays competitive and vibrant, and alternative lending allows that to happen. Far from just being a back-up for situations that the traditional lending sector can’t cater to, crowdfunding and P2P platforms can actually be a more efficient source of funding.

European Union

2018 is shaping up to be a regulatory nightmare for financial services (Information-age.com), Rated: AAA

Achieving compliance will not happen overnight. Indeed, MiFID II is widely considered to be one of the most sprawling pieces of financial legislation ever devised, and thus it presents numerous challenges. One of which being that recording calls will become mandatory for all areas of financial advice.

Then, if you add GDPR (the EU’s General Data Protection Regulation), coming into effect in May 2018, into the equation, 2018 is shaping up to be a regulatory nightmare for financial services firms. Under GDPR, we all have a‘ right to be forgotten’ or a right to erasure of all personal information held on us by a particular company. This places a duty on companies to be able to quickly access and delete the information they hold on specific individuals, on request.

However, comparing the responses of IT professionals and those responsible for managing Risk & Compliance within a business shows IT teams have a better overall understanding of the consequences of non-compliance. 62% of risk and compliance managers admitted to not knowing a company can be fined up to five million euros or 10 per cent of annual turnover, compared to only 42% of IT managers and decision makers.

Tinder for microloans: How to share lending risk with strangers (Russia Beyond the Headlines), Rated: A

A stranger’s photograph appears on your smartphone screen, and you decide whether to give him or her a loan or not. The money is not yours, but instead is provided by microfinance organizations. That’s the main difference from traditional American P2P (peer-to-peer) lending, and with Suretly you can earn or lose depending on whether the recipient of your largesse proves to be a reliable borrower or not.

Suretly is geared exclusively to short-term loans of up to one month; in other words, those with the highest interest.

The money itself is loaned by the microfinance organization that the borrower applies to, but only if they attract enough sureties to cover the whole amount, plus interest. Users share the risks, and depending on whether the individual returns the money or not, they can lose or earn from $1 to $10.

On the app, borrowers are divided into seven categories from A to G depending on their trustworthiness. The higher the risk that the loan won’t be repaid, the higher the price of its surety. The maximum commission is $1.5.

Australia

Goldfields Money makes Australian BaaS play with Singapore’s Instarem (Daily Fintech), Rated: AAA

Listed Australian deposit taking institution Goldfields Money (ASX:GMY) looks to be making good on its intention to become a leading player in the digital banking product distribution and BaaS market in Australia, announcing last week that it had signed an MoU with Singapore headquartered remittance fintech Instarem.

What is interesting about the MoU is the intent to move beyond remittance towards a broader banking play for cross-border SMEs and products orientated towards visa holders visiting or living in Australia.

The two companies should have a healthy market ready to capitalise on. According to the Australian Bureau of Statistics, over the last 10 years the proportion of the Australian population born in China alone has increased from 1.2% to 2.2%, coming in just behind New Zealanders and British immigrants. Those born in India currently make up 1.9% of the population, while citizens from the Philippines, Vietnam and Malaysia collectively add up to further 2.7%.

Migration isn’t going away. And the degree to which an individual’s assets are spread across countries is also on the increase thanks to globalization.

China

China’s Internet finance thrives as fraud fades (XinhuaNet), Rated: AAA

China has four large state-owned banks, and state-owned enterprises generally have easier access to financing. Many small companies are troubled by the financing bottleneck, creating pent-up demand.

Meanwhile, working-class families struggle to figure out where to invest their savings to seek higher returns, and many of them move money online. The country, home to the world’s biggest online population, also has a number of groups, such as college students, who are underserved by banks.

By March 2017, 3,607 Chinese P2P lending platforms had run into trouble or been forced to close, with only 2,281 platforms in normal operation.

On top of P2P lending, Internet finance also covers business such as third-party online payment, crowd funding, and other financial services.

Risk caused by the Internet finance industry has wide repercussions. Some P2P lending platforms resembled hybrid financial institutions providing clients with various financial services online, analysts said.

Businesses such as P2P lending, Internet-based insurance, third-party online payment, and online asset management were among key areas for strengthened supervision, industry observers said.

Internet finance last week appeared on the top banking regulator’s list of ten most important areas for enhanced risk control, with targeted measures to be taken to stem emergence of a financial crisis.

Wang said 2017 will be a watershed year for Chinese Internet finance as the rules are tightened, bringing the industry out of the wilderness.

Tishman Speyer, CreditEase team up to invest $ 1.4b in China (Deal Street Asia), Rated: A

New York-based developer Tishman Speyer is teaming up with China’s CreditEase Wealth Management to invest $1.4 billion in China and other countries within the next three years.

The strategic partnership is aimed to extend “global cooperation in resource sharing, fund investment, buyouts and business development,” the firms said in a joint statement.

APAC

Marvelstone Capital plans a robo advisor platform for family offices (AltFi), Rated: AAA

Singapore-based Marvelstone Capital plans a robo advisor platform for the under-served family office market in Asia.

The platform is being developed with Singaporean fintech startup Smartfolios, and will be launched in the third quarter of 2017. It will be available on desktop and mobile for Marvelstone Capital’s clients.

Marvelstone will target family offices based in Singapore, Malaysia, Indonesia, Myanmar, as well as India. The company points out that Malaysia is an important market and Cho added: “It is a huge market and the culture is quite unique as well, there’s a huge Shariah-compliant market, so it is definitely one of the most important markets for us.”

No Uber Moment for Fintech Just Yet (Broadridge), Rated: AAA

 

Tuesday April 11 2017, Daily News Digest

China Huishan Dairy Holdings

News Comments Today’s main news: Wonga warns borrowers of possible data theft. Lack of lucrative stock options causes mass exit from Klarna. Aadhaar Payment System first of its kind in the world.  Today’s main analysis: Two Sigma Investments LP acquires new stake in LC. Today’s thought-provoking articles: RateSetter CEO says don’t partner with banks. Shanghai court freezes Huishan Dairy’s […]

China Huishan Dairy Holdings

News Comments

United States

  • LendingRobot launches fund for institutional investors. GP:” The most interesting part here is the cost of operating a fund. If one operates a fund with 10 people, they need to make about $2mil per year in revenue. At 2% management fee (at the standard 2 and 20 structure, of 2% management and 20% incentive) that means breaking even around $100mil in assets under management (AUM). And for each year when the fund doesn’t have $100m AUM it will lose money which means one needs to raise equity money and diluate ownership. If to run the fund one needs 2 computer programmers and 1 data scientist then it will break even much lower or the fund fees could be much lower, perhaps as low as 0.35% management fee and no incentive fee as we have seen in certain captive funds, mostly in real estate. “AT: “LendingRobot is well on its way to becoming a must-have tool for institutional and personal investors. I can’t wait to see what niche products they come up with next.”
  • Two Sigma Investments LP acquires new stake in LC. GP: “Two Sigma has looked in the last year at entering the space in different ways. Perhaps this is the easiest and simplest way to enter the space. And I think buying the LC stock at the present valuation is a good risk to return trade. However, this is not serious: apparently Two Sigma bought for $167k of stock in LC, that’s lunch money, .so it must be just a portofolio equilibrating trade. Renaissance on the other side owns for $11mil of LC stock. And BlackRock bought 0.7% more share in LC, also an adjustment for sure.”
  • Consumer borrowing rises a solid $15.2B in February. GP:” There is seasonality in consumer borrowing as the holiday credit card bills come due.” AT: “Sign of an improving economy or a fluke? Still too early to tell, but if auto loans and student loans continue to climb, I’d say it’s a good sign.”
  • iinto stands out. GP:”Me too? Their strenght is however Meridian Capital’s backing, with $228bil in experience in the real estate.”

United Kingdom

European Union

  • Lack of lucrative stock options causes exits at Klarna. GP:” Thre is always a trade off between the cost to keep existing employees and cost of training new ones. And by cost I mean beyond the actual payroll costs, I mean also the untangible experience, motivation, company philosophy and know how who are lost or gained via the old and new employees. Some large companies in fact expect a certain level of turn over. GE, Boston Consulting Group, McKinsey and Goldman Sachs have put a lot of thought into this equilibrium” AT: “a 67% tax rate is excessive. Europe would do well to increase its position in the fintech sector by offering tax incentives to corporations that set up shop in EU countries.”
  • Bpifrance joins Lendix. GP: “Lendix’s fund is now 90mil EUR.”

Australia

China

India

Asia

News Summary

United States

LendingRobot launches fund for institutional investors in P2P and marketplace lending (AltFi), Rated: AAA

LendingRobot Series has launched a new fund offering exposure to alternative lending specifically designed for institutional investors called “LendingRobot Professional”.

It is now seeing “significant interest” in its LendingRobot Series offering from wealth managers and family offices. The new launch will add in more advisor-focused features and functionality to Lending Robot’s fully automated fund for alternative lending.

Two Sigma Investments LP Acquires New Stake in LendingClub Corp (LC) (The Markets Daily), Rated: AAA

Two Sigma Investments LP acquired a new stake in LendingClub Corp (NYSE:LC) during the fourth quarter, according to its most recent disclosure with the SEC. The fund acquired 31,856 shares of the company’s stock, valued at approximately $167,000.

Renaissance Technologies LLC boosted its position in LendingClub Corp by 53.9% in the fourth quarter. Renaissance Technologies LLC now owns 2,182,697 shares of the company’s stock valued at $11,459,000 after buying an additional 764,597 shares during the last quarter. BlackRock Investment Management LLC boosted its position in LendingClub Corp by 0.7% in the third quarter.

Consumer borrowing rises a solid $ 15.2 billion in February (CNBC), Rated: A

Consumers stepped up their borrowing in February as a rebound in the use of credit cards offset a slowdown in borrowing on autos and student loans.

The Federal Reserve says that total borrowing rose $15.2 billion in February, the biggest gain in three months and an acceleration from January’s increase of $10.9 billion.

iintoo Stands Out for its Offerings, Due Diligence & Social Approach to Investing in Real Estate (Crowdfund Insider), Rated: B

More and more people are turning to crowd-sourced real estate investing via the internet.

If you are an accredited investor with $25,000 or more to invest, one firm stands out on every important selection criterion:

  • Opportunities to invest in individual properties
  • Due diligence
  • Risk management
  • Background in real estate
  • Strategic alliances
  • Investment platform

This firm is iintoo.

iintoo’s preeminent strategic partner is Meridian Capital, a real estate finance and advisory firm that has arranged more than $228 billion of real estate debt.

United Kingdom

Wonga warns its borrowers over possible data theft (Financial Times), Rated: AAA

Hundreds of thousands of people who have borrowed money from payday lender Wonga are being warned that their personal data could have been stolen by hackers.

The company, which offers short-term loans at annual percentage rates that can be as high as 1,509 per cent, said that it had discovered an intrusion into its systems early last week but initially believed that no customer data had been accessed.

On Saturday, however, the company began notifying 270,000 current and former customers that there might have been “illegal and unauthorised access to some of your personal data on your Wonga.com account”. It added that names, contact details and bank account numbers were among the details that might have been illicitly obtained.

Don’t team up with banks just yet, RateSetter’s chief exec warns (P2P Finance News), Rated: AAA

FINTECH firms should refrain from collaborating with banks, RateSetter’s chief executive said on Monday, as they would lose more than they would gain from partnering up with the sector they had originally set out to disrupt.

Rhydian Lewis (pictured) said that the peer-to-peer lender had had a few “exploratory conversations” with high-street banks, but did not think a tie-up would add enough value for RateSetter.

FCA to expand robo-advice unit to guidance propositions (City Wire), Rated: A

The FCA will extend its robo-advice unit to include firms developing guidance solutions.

The FCA now plans to expand the project to help firms providing guidance rather than just regulated advice. This would see it help firms that do not make a recommendation at the end of the process.

£1m mortgages soar 24% in 12 months (Property Recorder), Rated: A

The latest analysis by peer to peer secured lending platform, Lendy, has found that the number of new residential mortgages worth over £1 million went up by 24% last year, as banks continue to favour lending to owner-occupiers and reduce lending to property developers.

According to the data, the number of new £1 million-plus mortgages written by banks last year increased to 4,844, up from 3,896 in 2015. The total value of these mortgages rose 18% over the same period to £8.95 billion from £7.59 billion.

Recent research from Lendy found that outstanding bank lending to developers fell 7% last year, to £14.8 billion in 2016 from £16 billion in 2015.

MarketInvoice enjoys record quarter thanks to new invoice product (P2P Finance News), Rated: A

MARKETINVOICE funded a record £130m of invoices in the first three months of 2017, putting it on track to achieve its £2bn lending target this year.

The peer-to-peer invoice finance platform concluded its bumper quarter with a record month in March, when it funded £54.7m-worth of invoices raised by UK businesses.

The growth has largely been driven by thelaunch of its new product, MarketInvoice Pro, which offers businesses an open funding line against their outstanding invoices.

Hogan Lovells launches global fintech mentors programme (P2P Finance News), Rated: A

HOGAN Lovells, the City law firm that has helped the likes of Zopa and Landbay move their businesses forward, has launched a global fintech mentors programme to support more firms in the sector.

The company, which announced the programme at the Innovate Finance summit in London, will provide mentors in the UK, US, Germany and Hong Kong, who will offer advice, training and networking opportunities to fintech firms looking to launch, improve and expand their offerings.

Online Lender Spotcap Launches Fintech Fellowship for Aspiring UK Graduate Students (Crowdfund Insider), Rated: B

European-based lending platform Spotcap announced on Monday the launch of its new fintech fellowship, which is geared towards aspiring graduate students. According to the online lender, the program will provide one student per academic year with a £8,000 stipend towards their studies.

Applications are currently open and will close on July 31st.

To be eligible, those interested must have the following:

  • An offer of admission to a master’s or MBA program at an accredited British university starting in September/October 2017
  • A British citizen
  • Achieved or expected to achieve a 2.1 or above in undergraduate degree
  • A demonstrable interest in a fintech related field, with an intention to work in fintech upon graduation
European Union

Lack of Lucrative Stock Options Causes Exits at Swedish Startup (Bloomberg), Rated: AAA

A lack of lucrative stock options at Klarna AB, one of Europe’s few technology unicorns, is causing a raft of senior exits, highlighting the tech industry’s growing dismay with Swedish tax rules.

The Stockholm-based payments company has lost at least 15 senior staff in the past year. Most recently Brian Billingsley, Klarna’s head of North America, left the company last month.

Four senior Klarna executives who have left the company in the past year contacted for this story all said that the departures were not indicative of management turmoil or strategic failings at the Swedish firm. Instead, they noted that Swedish tax laws make it difficult for Klarna to dole out the lavish stock options that typically make executives loathe to leave fast-growing technology companies before they go public or are acquired.

Tech firms in Sweden are chafing against government rules around taxes. Under current law, stock options are taxed as income from employment, at a rate as high as 67 percent. In the U.K., by contrast, a range of options to decrease capital gains taxes are easily available.

Alongside Billingsley’s exit, Klarna’s chief financial officer, its top communications executive and several top European regional executives all left over the past year.

Bpifrance Joins Lendix: Subscribes to Co-Financing Fund Associated with the Online Lender (Crowdfund Insider), Rated: A

Online lender Lendix announced on Monday that Bpifrance has joined its lending platform through a co-financing fund.

According to Lendix, Bpifrance’s new commitment brings the fund to the likely size of its hard cap set at 90 million euros.

Australia

Moneysoft helps create new financial advice tool with Mortgage Choice (ifa), Rated: AAA

Moneysoft has said it partnered with Mortgage Choice Financial Planning to create a financial advice tool with the aim of “bolstering” clients’ money skills.

In a statement this morning, Moneysoft said its advice technology will power MoneyTrack, a new tool to be offered by Mortgage Choice Financial Planning.

China

Shanghai court freezes Huishan Dairy’s assets on US$ 200 million loan default (SCMP), Rated: AAA

China Huishan Dairy Holding said a Shanghai court has frozen assets of the company and its chairman as requested by a mainland wealth management firm, and that HSBC alleges it has defaulted on a US$200 million loan.

Huishan, the country’s largest dairy farm operator, said in a filing to the Hong Kong stock exchange late Monday that it had received a letter on Friday from HSBC alleging “non-compliance with certain of the covenants” and “has therefore called events of default under the Facility Agreement”. HSBC acted on behalf of six creditor banks including China CITIC Bank International.

Huishan also said that a Shanghai court ordered last week that cash or equivalent assets worth 546.1 million yuan (US$79 million) be frozen, after an application was filesd by Gopher Asset Management. The asset freeze applies to the dairy, its chairman Yang Kai, and his wife.

Source: Asia Insider
SCMP

Hyperfinance research uncovers key concerns around FinTech adoption in Hong Kong and Singapore (Simmons-Simmons), Rated: A

Hyperfinance, the firm’s flagship research programme, investigates what large banks and asset managers need to do to succeed in accelerating their digital innovation and overcome the challenges they face.

Institutions in Hong Kong and Singapore report very high levels of interest in FinTech, with focus on both external and internal investment. 92% of respondents in the two markets expect to collaborate with a FinTech firm in the next 18 months.

M&A and Regulatory risk

  • Almost two thirds (62%) of respondents report building in-house expertise to improve digital and FinTech capability in recent years, while less than half (47%) consider consortia projects with other institutions to be effective in improving digital/FinTech innovation.
India

Digital payments to become a breeze with Aadhaar Payment System (The New Indian Express), Rated: AAA

The Aadhaar Payment System (APS), to be launched on April 14, is a revolutionary model that allows users to pay without using plastic money or a prepaid payment instrument such as PayTM. No such card-less, personal identification number (PIN)-less payment system exists in the world yet and this is a first-of-its-kind model India is experimenting. “It’s a giant leap and has the ability to transform the way digital payments are made, particularly in rural areas, where the use of mobile phones and cards is less,” says A P Hota, managing director and CEO, National Payments Corporation of India.

Asia

Over-regulation of fintech firms hogs limelight at forum (The Star), Rated: AAA

The need for alternative financing options for SMEs and the over-regulation by authorities faced by fintech (financial technology) companies were among the key arguments raised at a discussion among stakeholders of the financial sector.

Titled “Will Fintech disrupt the future of capital-raising?”, the session at the IFN Forum Asia 2017 saw representation from the traditional banking sector and fintech companies as well as the SME segment.

SME Corp Malaysia deputy CEO (II) Mohd Rithaudden Makip noted that Malaysia had been progressive in terms of facilitating the entry of fintechs, particularly to cater to the needs of the SMEs.

Fintech Talk: The potential rise of MSMEs and creative industry via P2P lending (The Jakarta Post), Rated: A

It is no longer breaking news that micro, small and medium enterprises (MSMEs) are among Indonesia’s economic turbines and a particular focus of President Joko “Jokowi” Widodo’s administration.

The number of MSMEs in Indonesia reportedly stands at approximately 49 million and they are projected to absorb 107 million workers.

It is a fact noted by the Cooperatives and Small and Medium Enterprises Ministry, as the contribution amounted to 60.3 percent of total GDP in 2016 from 57.8 percent in 2011.

The birth of financial technology (fintech), specifically peer-to-peer lending (P2P lending), which is backed by technological developments, is a breath of fresh air offering financing solutions through platforms that may make MSME operations easier.

Authors:

George Popescu
Allen Taylor

How Machine Learning Makes Online Lenders More Profitable

LendingRobot statistical analysis

Artificial intelligence and machine learning technologies are proliferating in the alternative lending niche, but in late 2013, a unique concept saw its birth when Emmanuel Marot shifted from working with a photo sharing app and started working on an algorithm to assist him with his personal investing on Lending Club. “One of my obsessions is to […]

LendingRobot statistical analysis

Artificial intelligence and machine learning technologies are proliferating in the alternative lending niche, but in late 2013, a unique concept saw its birth when Emmanuel Marot shifted from working with a photo sharing app and started working on an algorithm to assist him with his personal investing on Lending Club.

“One of my obsessions is to think about algorithms that can help with human decisions and make things simpler and faster,” Marot said.

Marketplace lending (MPL) began under the moniker “peer-to-peer.” The idea was for individuals to invest in each other’s ideas and bypass traditional financial institutions to fund projects and businesses. Somewhere along the way, however, the institutions got involved and “peer-to-peer” transitioned into MPL. As a result of this shift in the market, investing became complicated and time consuming for individuals. That’s because big financial players were using scripts and applications to identify loans and snagging up the best investments before smaller players like Marot could act on them.

“It took just two minutes to see new loans,” he said, “but a lot of the loans were gone in five minutes.”

Tired of being left in the dust by those who were automating their investments, Marot decided to create his own script to combat this disadvantage. After polling about 70 other investors in the marketplace to gauge interest, he decided to buy a domain name and build a website then invited other investors to try it out. That’s when LendingRobot was born.

What LendingRobot Does For Whom

After trying out the script for the first time, one of Marot’s early customers sent an email that read, “This is brilliant.” He immediately tossed $200,000 into his Lending Club account. Not long after that, LendingRobot announced they were going to become alternative lending advisors and Marot set about improving his algorithm. But let’s back up a bit.

At the beginning of 2014, LendingRobot collected $700,000 in a seed round and followed that in January 2015 with a $3 million Series A funding round. This allowed him to expand his service to meet the needs of investors using other lending platforms. LendingRobot now manages portfolios at Prosper and Funding Circle, as well.

“We don’t have custody of the money,” Marot said. “The client wires their money directly to the platform and we connect to the platform on their behalf. We look at how much the customer has available and submit orders on their behalf.”

There’s no charge for accounts under $5,000, but for investors with larger amounts, the fees are minimal.

“If you have $50,000 at Lending Club,” Marot said, “we’ll charge about $200 per year.”

Those management fees are way less than traditional money managers charge for Wall Street investments, which adds to the attractiveness of marketplace lending for many investors. Recently, LendingRobot rolled out a new service called LendingRobot Series, the first robotic hedge fund in the alternative lending niche.

“The client wires their money to us and we manage it as a fund by investing in the origination platform,” Marot said. “It’s a more complex product and there are a lot of fees we have to pay, so it’s more expensive for the investor.” This vehicle costs investors about 1% in management fees.

The Technology Behind the Robot

For the robo-fund, LendingRobot added a platform—Lending Home. This allows investors to diversify their marketplace lending portfolios.

“It’s not hard to connect to a new platform,” Marot said. “But very few of them have APIs to allow us to do that. We could do it by scraping, but that’s ugly and fragile.”

Marot said that was how he started with managing Lending Club accounts for LendingRobot customers, but due to safety concerns and the risks involved, he decided to use APIs instead.

Rather than work off-the-shelf, LendingRobot writes its own algorithms, but they are based on well-known techniques.

“We settled on computational statistical analysis (CSA),” he said, “which is useful in medical studies. If a patient has an illness and you want to treat it with medicine to increase survival chances, how do you factor that in? We found that process worked well with the products we were offering on loans. You have a loan that starts paying, but you can’t guarantee that it will continue to pay, and that’s where computational statistical analysis comes in.”

Because loans can be paid back, once the payoff is complete, the loan disappears. LendingRobot uses a mix of CSA and a machine learning algorithm to service and manage loans through the platforms it connects to on behalf of its customers.

 

LendingRobot’s machine learning algorithm is helpful in determining how to weigh all the factors that go into managing loans on different platforms for each client. It’s not important for people with low or sterile FICO scores, but it is instrumental in finding mathematical curves and balancing the weight of each of the factors involved—loan payment amounts and monthly income, for instance. They’re based on the time value of money calculations and the probability of a certain loan defaulting at specific times during the life of the loan. Using advanced mathematical calculations and logistic regression, LendingRobot can make certain predictions and use that knowledge to determine the value of its loans.

Keep It Simple, Robot

Marot aims for simplicity.

“We want a tool that normal people can use for their P2P investments,” he said. “They don’t want to look at numbers for hours. It should be a no-brainer to invest in P2P loans.”

Because LendingRobot was able to turn complex machine learning algorithms into a simple platform that makes investing easy, the company has seen 400% growth in terms of assets managed year over year. But he believes they can be much bigger.

“It takes time for people to become familiar with new asset classes,” he said. “When they do, alternative lending will become more popular.”

Marot is confident that the alternative lending niche will grow as more people learn that they can get better investments and pay fewer fees.

“People don’t need to see all the intricacies behind it,” he said. Clients can open their own accounts at Lending Club, Prosper, and Funding Circle and then open an account at LendingRobot to manage them. For Lending Club and Prosper, the minimum investment is $25, but Marot recommends at least $5,000 because it allows an investor to invest in hundreds of loans. The more diversified the portfolio, the lower the risk.

“If you invest in 250 notes,” he said, “then you are more likely to get stable returns.”

LendingRobot’s smallest customer has $300 in their account. The firm’s largest client has $4 million, so investors don’t have to be accredited. Anyone can get in.

Marot narrows the demographics of his clients into two main groups. The first group are older investors who aren’t retired but are looking at retirement. They’re typically well-versed in investing but aren’t financial experts. They’re doctors, lawyers, and other non-finance professionals. The other group consists of younger people, early 30s usually, who aren’t rich but are doing well. They’re technologically savvy and understand the importance of investing, but they don’t trust banks or the stock market.

“Our clients expect transparency,” he said. “And simplicity.”

The Future of Alternative Lending

Currently, Marot said, the decision-making process for lending products is still manual. Lending Club still has people answering telephones for customer service, for instance. But Marot sees those tasks increasingly becoming more automated.

He also sees lending platforms moving toward specialization. It will become simpler to borrow money.

“Investors don’t care so much about where their money goes as long as it gets good returns,” he said.

Nevertheless, he sees the industry moving toward more specialization, with hundreds of platforms drilling down to specific niches of investment. Technology will be the facilitator of that specialization, he said. Already, it’s happening, because you can go to some platforms and invest only in real estate. Cloud-based operations allow companies to use services anywhere in the world, so companies can have their accounting department in Australia, customer service in India, marketing in California, and headquarters in New Jersey.

“It’s kind of crazy that it still takes a couple of days to wire money,” Marot said. LendingRobot uses Dwolla, a state-of-the-art technology company that makes money transfers easy. “In the future, we’ll have something more efficient.”

The blockchain, for instance, is a digital ledger that make smart contracts simple and efficient. LendingRobot uses the technology for its own contracts. Marot sees it becoming a bigger part of the global financial infrastructure. Because of the blockchain and its public nature, there’s no way for LendingRobot to be dishonest. It fosters transparency.

“We use a hash code system on our own ledger,” he said. “We can drill down to a single cent, show how many payments are made, know when a loan was paid off, and have a line for each asset in an account. We can calculate the hash code based on that ledger.”

LendingRobot is on the lookout for more platforms to manage for its clients, however, Marot doesn’t want to branch out into managing other asset classes. He plans to stick with marketplace loans. But to get to that final state of glory, they’re going to need more machine learning engineers and people who can work with algorithms.

Author:

Allen Taylor

Friday January 27 2017, Daily News Digest

LendingRobot diversification

News Comments Today’s main news: Completely automated robo-hedge-fund for online lending by LendingRobot. 17 UK P2P providers have IFISA permissions now. Today’s main analysis: Making loan data actionable. Today’s thought-provoking articles: Why can’t financial advisors and P2P lenders get along? Scott Morrison backs robo-advisors to cheap superannuation advice to retirees. United States LendingRobot launches robo hedge fund […]

LendingRobot diversification

News Comments

United States

  • LendingRobot launches robo hedge fund for online lending. GP:”The interesting part of the fund is that it’s completely automatic and uses Blockchain. I am not sold on the need to use Blockchain, seem to be mostly a PR stunt, which will likely work.” AT: “We reported on LendingRobot’s plan to launch this fund but didn’t realize it would be so soon. I’d be interested in how it performs.”
  • Making Loan Data Actionable. AT: “There is some very interesting analysis on standardizing data in this white paper, but its focus is on the Orchard methodology.”
  • $15M raised through RealtyShares for real estate in New England. GP:””We continue to see the crowd funding real estate market growth. We look forward to when it will (mostly) cover other segments beyond the short term property flippers.”
  • LendIt USA publishes 2017 agenda. AT: “If you go to one conference this year, this should be it.”

United Kingdom

European Union

Australia

United States

LendingRobot Launches Robo Hedge Fund for Online Lending (Crowdfund Insider), Rated: AAA

LendingRobot has officially launched their next big vertical: a Robo-Hedge Fund for alternative lending.

The LendingRobot Series is described as a “one-stop” solution for cloud-based, automated investing secured by Blockchain (DLT) technology. The Robo-fund uses machine learning and proprietary algorithms to hopefully provide market-beating returns.  Unlike many other hedge funds, liquidity will be facilitated and transparency is paramount.

LendingRobot describes how the Robo-fund will work. The company will manage investments across four different Series, with target maturity going from 20 to 36 months, and estimated net returns up to 9.66%. Investor’s money is converted in Units of ownership in these Series, that are issued on a weekly basis. By default, loans payments keep being re-invested and the Units value increases. LendingRobot publishes every week a detailed ledger of its holdings, down to the value and individual payments made by each note.

LendingRobot started with just two lending platforms: Lending Club and Prosper. They later added Funding Circle – available to accredited investors only.  Today they are adding LendingHome to their portfolio of their assets.

Speaking to Marot, additional lenders are definitely on the list.

Will LendingRobot expand beyond the borders of the US? Absolutely.

First, LendingRobot will accept international investors. But do not be surprised if LendingRobot shows up in another country at some point in the future.

Making Loan Data Actionable (Orchard Platform), Rated: A

There’s no equivalent to the Financial Accounting Standards Board (FASB) and Generally Accepted Accounting Principles (GAAP) or Fannie Mae and Freddie Mac and the Uniform Closing Dataset (UCD) in the world of online lending.

Whether to power the tools investors need to conduct analysis across lenders or to allow originators to improve their businesses by providing better industry benchmarking, among other things, the creation of an industry-wide, standardized dataset will help advance the sector further. At this stage of the industry’s growth, it’s vital that we maintain focus on data quality, integrity, and transparency.

Download Orchard Platform’s white paper “Making Loan Data Actionable” here.

$ 15M Raised for New England Real Estate Through RealtyShares Ecosystem (BusinessWire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, today released new data showing the wide reach the platform has established in Southern New England since inception.

Developed as a way to efficiently raise capital for real estate projects, RealtyShares has facilitated 20 deals across Massachusetts, Connecticut and Rhode Island totaling more than $15 million invested throughout the region. By leveraging technology and a network of 38,000 accredited investors, the company allows sponsors and developers to potentially raise money faster than traditional financing options.

While also a strong market for commercial opportunities, RealtyShares has focused mostly on the single-family home market in the Northeast. Along with individual properties, the company has completed ten separate portfolio deals encompassing multiple properties per listing. The largest raised $2 million dollars from more than 90 investors from across the country.

Massachusetts leads the way with 13 deals funded through the ecosystem, totaling $8.6 million across multiple cities. The majority of deals funded in the region have been residential equity offerings, giving investors a larger stake in the project with increased risks.

To date, the RealtyShares network of investors has funded upwards of $300 million across more than 550 investment opportunities on the platform, funding residential and commercial projects in 35 states.

LendIt USA 2017 AGENDA (LendIt), Rated: AAA

LendIt USA has published its full agenda for the 2017 conference on March 6 – 7. You can search panels by track (such as lending or real estate).

MARCH 6 • MONDAY

9:15am –  10:05am R OCC Limited Charter: From Theory to Practice

⑧ 1E16, 1E17 – RegTech: Policy & Regulation
  9:15am –  10:30am S Digital Marketing Channels

⑤ 1E11 – Training for Staff
  9:40am –  10:00am K If I Were To Start A Bank Today, This Is What It Would Look Like

① Special Events Hall
  9:45am –  10:35am L Financial Services Enterprise Projects

⑦ 1E14, 1E15 – The Fintech Universe
  9:45am –  10:35am G Empowering Women: The Key to Global Financial Inclusion

④ 1E10 – Financial Inclusion
  9:45am –  10:35am O China Disrupted: How Fintech is Changing the Way That 1.5 Billion People Bank

② 1E6, 1E7 – Global Perspective
  9:45am –  10:35am V Online Lending/Investing 101

⑥ 1E12, 1E13 – The Investor’s Perspective
  9:45am –  10:35am U How Banks are Coming Back to SME Lending

③ 1E8, 1E9 – Innovation in Lending
 10:00am –  10:20am K Alternative Lending is Dead, Long Live Data

① Special Events Hall
 10:10am –  10:40am R Self Regulatory Leaders

⑧ 1E16, 1E17 – RegTech: Policy & Regulation
 10:20am –  10:30am K Why Securitization and Online Lending are So Important For Each Other

MARCH 7 • TUESDAY

9:15am –  9:40am N Case Study: Using Artificial Intelligence to Improve Underwriting

④ 1E6, 1E7 – Innovation in Lending
  9:15am –  9:40am M The New Era of Buying and Selling a House

② 1E16, 1E17 – Innovation in Real Estate
  9:15am –  9:40am W AI Powered Investing

⑦ 1E14, 1E15 – The Fintech Universe
  9:15am –  9:40am P Valuation of Consumer Loans/Notes

⑥ 1E12, 1E13 – The Investor’s Perspective
  9:35am –  10:15am K Artificial Intelligence is Poised to Transform Financial Services

① Special Events Hall
  9:45am –  10:35am B Exploring Different Types of Bank Partnerships

⑧ 1E10, 1E11 – Bank Technology
  9:45am –  10:35am C Back on Track: Viewpoints from the Large Consumer Lenders

③ 1E8, 1E9 – Innovation in Lending
  9:45am –  10:35am N The New Frontier: AI, Machine Learning and Advanced Analytics

④ 1E6, 1E7 – Innovation in Lending
  9:45am –  10:35am M Bringing the Mortgage Process out of the Dark Ages

② 1E16, 1E17 – Innovation in Real Estate
  9:45am –  10:35am W The Future of Wealth Management

⑦ 1E14, 1E15 – The Fintech Universe
  9:45am –  10:35am P What it Takes to Securitize: Securitization in Marketplace Lending

⑥ 1E12, 1E13 – The Investor’s Perspective
 10:15am –  10:25am K Lang Di Fintech Announcement/China Fintech

See the full agenda here.

United Kingdom

Landbay’s broker website launch marks move on challenger bank market share (Mortgage Solutions), Rated: AAA

With an alternative funding model, the phrase attached to any form of funding which falls outside the traditional deposit-taking route or wholesale market financing, Landbay has sat on the fringes of buy-to-let lending since entering the market in 2014, but that seems about to change.

The announcement that Landbay plans to ramp up business volumes to a level which puts it neck and neck with the challenger banks seems courageous, given the buy-to-let market is currently going through one of its most turbulent periods since the financial crisis.

As an unregulated buy-to-let lender, Landbay is not required to follow the PRA’s rules, which could be seen as an unfair advantage by its regulated counterparts, but it is not an opportunity the peer-to-peer firm has chosen to exploit. “We believe the new regulatory framework is a good thing for the sector, and have chosen to fully comply with the regulator’s guidelines,” explains Goodall.

Aside from growing its mortgage lending this year, Landbay is preparing to launch its ISA in February – a first for the peer-to-peer sector, says Goodall.

Any other predictions for a fairly unpredictable market? Goodall says we could be heading for a slow down in buy-to-let remortgaging activity. “Some 50% of the buy-to-let market is remortgages. Five-year fixed rate products are exempt from the PRA’s standards so we expect to see borrowers opting for longer-term products, slowing down the speed at which people switch deals.”

Why can’t financial advisors and P2P lenders get along? (altfi), Rated: A

AltFi Data’s returns index, which is fuelled by granular loan level data from Zopa, Funding Circle, RateSetter and MarketInvoice, shows that the average net return of these four platforms has hovered between 4.5 and 6.5 per cent for the entire lifetime of the industry.

And yet the fact remains: financial advisors and peer-to-peer platforms simply do not get on.

LendingWell is attempting to solve some of these problems by providing a more seamless mode of access for advisors who are interested in peer-to-peer.

One platform that might stand a chance of breaking through the IFA barrier is the recently authorised Octopus Choice – Octopus Investments’ P2P offering. The platform has matched £45m of property loans since launching in April of last year, and already has a significant amount of advised money lent out. Parent company Octopus has over 6bn in assets, and has worked with thousands of financial advisors over the past 15 years or so.

Stuart Sheppard of Octopus think that the majority of peer-to-peer lenders simply lack the experience necessary for working with IFAs.

“Advisors, quite understandably, want to be paid for their advice,” said Slesinger.

Is the UK ready for the peer-to-peer lending gold rush? (Business Zone), Rated: A

The IFISA market is yet to come into full effect because the largest platforms are unable to offer the service. At the moment, 17 P2P providers have permission, but this group is limited to relatively small, new platforms. None of the biggest six marketplaces, which stand head and shoulders above the rest of the pack, are included.

BusinessZone’s sources say this will happen in the next two weeks when a number of platforms will receive authorisation to offer the product from HMRC.

The Current and Expected Crowdfunding Regulation in the UK. (TechBullion), Rated: B

Currently, the UK does not regulate donation-based crowdfunding and rewards-based crowdfunding. However, loan-based crowdfunding and equity-based crowdfunding are under the scope of the UK law.

Equity-based crowdfunding platforms are required to obtain a license or to have regulated activities managed by authorized parties. They are also required to have a screening process in order to sort sophisticated and non-sophisticated investors.  A “non-sophisticated” investor should not be allowed to invest more than 10 percent of their net investable asset through crowdfunding platforms.

Other important regulations in crowdfunding concern the communication of the offers, the language, fairness and clarity of description used to describe the offers and the risk awareness associated with them. These rules aim to establish platforms where people are not only treated fairly but allowed to make well-informed decisions.

The FCA is expected to introduce changes to the rules around the transparency and disclosure of information by companies raising money via crowdfunding. Although the new rules will apply to all types of crowdfunding, the focus will largely be on peer-to-peer lending, which in some cases provides products or services similar to more regulated products or services offered by banks.

European Union

5 Exciting Fintech Startups (The Merkle), Rated: A

Stash wants to stand out in this regard, and they have gathered support from over 300,000 users already. By letting users invest as little as $5, the platform is open to anyone looking to diversify their portfolio.

Competing in the world of cross-border payment services is not an easy challenge, especially for fintech startups. Founded in 2012 and based out of London, Currency Cloud provides this functionality for businesses and corporations only, rather than end users.

Enter iZettle, a startup based in Stockholm, Sweden that offers free card readers to their clients, focusing on small businesses owners.

Another fintech startup focusing on competing in the payment processing market is Klarna. Instead, the payment processor allows users to place orders by entering an email address and zip code.

Peer-to-peer lending is one of the many financial sectors that will see significant disruption by fintech startups. Founded in 2005 and based out of London, Zopa is one of the companies trying to gain a foothold in this competitive market.

German P2P Lending Market – Short News (P2P Banking), Rated: A

Documents accessed by P2P-Banking.com show that the largest (by loan volume) German p2p lending marketplace Auxmoney made an operating loss of 13.1 million EUR in the year 2015 (compared to 8.48M loss in 2014). This was before receiving Series D funding in early 2016.

Funding Circle CE, Berlin, the German division of Funding Circle closed 2015 with an operating loss of 9.45 million EUR (compared to 2.83M loss in 2014).

Germany seems to be a very hard market for p2p lending companies to crack. Interest rate levels for consumer loans are very low compared to other markets. banks are competitive. And there is no significant amount of credit card debt that can be refinanced. P2P Lending marketplaces cannot offer better interest rates, they need to find other competitive advantages. And customer acquistion costs to win borrowers through online marketing channels are high in Germany.

Australia

Scott Morrison backs robo-advisers to cheap superannuation advice to retirees (Financial Review), Rated: AAA

Treasurer Scott Morrison has endorsed “robo-advisers” offering cheap automated superannuation advice as the next step in Australia’s financial industry, and urged consumers to overcome their privacy fears about business and governments sharing personal data.

The government is considering major changes to Australia’s 500 privacy and secrecy laws which could allow businesses and government to capitalise on the “enormous untapped potential of Australia’s data” by giving customers more control over their personal information and giving greater access to “anonymous government-held data”.

Mr Morrison plans to encourage more robo-adviser start-ups in Australia by giving them greater scope to test their services in the market without facing the costs of regulatory licensing.

New Digital Lender Sharing the Love (Scoop), Rated: A

Set to open its virtual doors in 2017, Nectar is leading the next wave of digital lending to hit New Zealand shores after peer-to-peer lending arrived in 2014.

“Unlike other borrowing options, Nectar offers a simple, fully-automated online application and approval process that produces a personalised loan offer in just 7 minutes, and offers a same-day transfer of funds,” explains Symon Nausbaum, Nectar’s founder. “We want Kiwis to have a simpler, faster, and more transparent way to get a loan,” he says.

Nectar uses an advanced, data-driven method for assessing credit, drawing on a wider variety of data sources, to create a personalised 360-degree profile of customers, and thus improving their chances of being able to borrow when compared with other traditional sources.

Authors:

George Popescu
Allen Taylor

Friday January 20 2017, Daily News Digest

loan principal outstanding uk

News Comments Today’s main news: LendIt announces finalists to first annual industry awards. OFF3R reports strong growth in UK P2P lending (38%growth in 2016 to £2.653 billion) Today’s main analysis: You can’t keep a good crowd down. Today’s thought-provoking articles: LendingRobot introduces robo-fund for alt lending. France sees first big loss in RECF. United States LendIt announces finalists for […]

loan principal outstanding uk

News Comments

United States

United Kingdom

European Union

India

United States

Finalists Announced for First Annual LendIt Industry Awards (PR Newswire), Rated: AAA

LendIt, the world’s largest show in lending and Fintech, today announced finalists for its first annual LendIt Industry Awards. Out of hundreds of applicants worldwide, the selected finalists are all vying for top honors within 18 categories, which celebrate Fintech market leaders, emerging innovators, and top talent. Finalists were chosen based on innovation, emerging talent and top performers.

The finalists will be evaluated by more than 30 renowned Fintech industry experts including CEOs, investors and media. The winners will be announced during the LendIt Industry Awards Show & Dinner taking place on March 7th at the Edison Ballroom in the heart of New York City. In addition to the ceremony, the LendIt Industry Awards evening will include a cocktail reception, a 3-course dinner and live entertainment.

Below are the finalists, per category:

Innovator of the Year

  • Fundbox
  • Lemonade
  • LendKey
  • XOR Data Exchange
  • Zopa

Top Consumer Lending Platform

  • Avant
  • LightStream
  • Marlette Funding
  • SoFi
  • Upstart
  • Zopa

Top Small Business Lending Platform

  • Ascentium Capital
  • Iwoca
  • Kabbage
  • OnDeck
  • StreetShares
  • SmartBiz

Most Innovative Bank

  • Cross River Bank
  • Goldman Sachs
  • ICICI Bank
  • Santander Bank
  • UBS
  • WebBank

Best Journalist Coverage

  • George Popescu, Editor in Chief, Lending Times
  • Anna Irrera, Fintech Correspondent, Reuters
  • Zack Miller, Founder and Editor, Tradestreaming
  • Sean Murray, President and Chief Editor, deBanked
  • Oscar Williams-Grut, Senior Reporter, Business Insider UK
  • Tony Zerucha, Managing Editor, Bankless Times

See the full list of finalists in every category here.

The First Robo-Fund for Alternative Lending (LendingRobot Email), Rated: AAA

LendingRobot clients can enjoy both superior returns and low volatility, thanks to the combined benefits of the asset class and our machine-learning algorithms, but we think now is the time to move to the next level. This is why, next week, we will launch ‘LendingRobot Series’, the first combined robo-advisor/investment fund ever created for Alternative Lending.

Like a fund, LendingRobot Series will offer automated diversification on multiple origination platforms. Unlike a traditional fund, LendingRobot will improve liquidity, be flexible, and be completely transparent. Uniquely, you will decide how you want your portfolio to be constructed: conservative vs aggressive, short term vs long term.

I highly recommend you to visit to learn more and secure a spot immediately, as we are initially limited by regulatory and business constraints to only 99 accredited investors.

Lending Robot for Advisors Launches Connecting to Lending Club Platform (Crowdfund Insider), Rated: A

Lending Robot, the robo-advisor that connects retail investors to P2P loans, has launched a new product: LendingRobot for Advisors. This new service will help connect registered investment advisors to invest in Lending Club loans.

TD Bank to sponsor MIT’s first fintech hackathon (Finextra), Rated: A

MIT has recruited TD Bank and Prudential to sponsor its first-ever fintech hackathon.

The two-day event in February is challenging students and young professionals to create an interdisciplinary team and compete for a $10,000 prize pot.
The 30-hour hack will culminate with a demo to a panel of judges and mentors, with the winning team pocketing a $4k grand prize and the four runners up walking away with $2k bonuses.

How Fintech Can Disrupt the $ 14T Mortgage Market (Investopedia), Rated: A

Fintech, which has already disrupted the payments, banking and financial advisory markets, is beginning to enter the $14 trillion mortgage market.

Non-bank mortgage lending is expanding as commercial banking declines. In fact, mortgage lending by type of institution shifted dramatically between 2007 and 2014. Recently, commercial banks provided 52% of mortgage lending, down from 74% in 2007. In 2014, mortgage lending by non-banks almost doubled to 43% from 23% in 2007.

Radius Financial Group cracked the fully paperless mortgage code in 2016.

Clara, a California startup, aims to solve some of the mortgage problems that plague consumers seeking to buy a home. Founded by engineer Lukasz Strozek and Jeff Foster, a former policy advisor at the U.S. Treasury Department, Clara strives to smooth out the inefficiencies that accompany the mortgage lending industry. Clara differentiates itself by educating lenders and offering an online portal for completing paperwork.

Lenda, a home-loan provider, also offers a digital mortgage solution. Other digital mortgage lending services include Quicken Loans’ Rocket Mortgage. Then there’s SoFi, the fintech firm known for student and personal loan services, which is also gaining ground in the digital mortgage lending sphere.

A recent JD Power survey found that 62% of respondents under 35 who bought a home this year stated that they’d use a mobile app to complete a mortgage application, if available from their lender.

United Kingdom

You can’t keep a good crowd down – the rise of alternative finance (altfi), Rated: AAA

As the graphic clearly illustrates, the past three years have been a period of very strong growth for the sector, and business has grown six- to seven-fold for market leaders Funding Circle and Zopa in that time.

As one might expect, net lending (i.e. originations less redemptions), has been positive and gathering pace over time – a clear sign that investors have slowly but surely embraced P2P lending and Crowdfunding as genuine alternatives to conventional forms of finance.

However, the blip that should be immediately obvious to everyone is the six-month lull around the EU referendum vote in June 2016. While total net lending remained in positive territory (i.e. the industry was growing overall), volumes halved to an average of c.£40m/mth in the months leading up to and immediately after Brexit (versus c.£80m in the six month period prior).

Nonetheless, volumes have rebounded quickly and strongly, and by November 2016, monthly net lending across the four largest P2P platforms had reached a new record of over £100m.

OFF3R Index: Very Strong Growth for UK P2P Lending in 2016 (Crowdfund Insider), Rated: AAA

Today we have numbers from OFF3R that captures the activity of 9 UK peer to peer lending platforms.

According to the OFF3R Index, p2p lending grew by 38% in 2016 increasing by £732 million during the year topping £2.653 billion.

  • The European Parliament announced towards the end of 2016 that the Equity Crowdfunding limit for raises on platforms without an investment prospectus would increase from €5million to €8million.
  • Greater consistency of financial performance data and clearer vetting of investors may impact the industry.

Assetz Capital Hurdles £200 Million in Lending to SMEs (Crowdfund Insider), Rated: A

Assetz Capital, a peer-to-peer lending platforms, has announced having originated £200 million in loans since launching in 2013. The alternative finance platform targets small and medium-sized UK businesses and also helps property developers acquire funding. Assetz Capital says it is now originating secured loans totaling up to £26 million per month. In Q4 of 2016, Assetz Capital lent over £45 million.

The milestone caps a record year for Assetz Capital, in which over £108 million was lent in 2016. Investors earned a total of £17 million of interest since the platform launched.

‘Socially useful’ finance and the regulation of peer-to-peer lending in the United Kingdom (LSE), Rated: A

These appeals to socially useful finance occurred at a time in which there was also a large-scale expansion of forms of financial activity that could lay claim to meeting some of these criteria.  A sub-section of these emerging financial activities—peer-to-peer lending, in which various platforms focus on brokering direct lending agreements between counterparties—has seen particularly impressive growth, with statistics from Altfi showing lending volume across the sector totalling over £7.8bn by January 2017, rising from just £400m in January 2013.

The regulation of the peer-to-peer lending marketplace is therefore of considerable significance, because regulation by the state represents an explicit endorsement that an activity is legitimate and credible as well as providing reassurance that adequate protections are in place.

In sum, then, P2P lenders were successful in lobbying for regulation, providing the industry with reputational legitimacy without stifling industry practices.   In contrast to mainstream finance were such appearances of capture have led to accusations of rent-seeking, the case of P2P lending appears to have facilitated financial activities that meet some regulators’ (admittedly modest) understandings of ‘socially useful’ finance.

European Union

Tout Perdu: First Big Loss Hits French Real Estate Crowdfunding Sector (Crowdfund Insider), Rated: AAA

According to a report in Capital, real estate developer Terlat has used two crowdfunding platforms to finance projects. Terlat has leveraged both WiSeed and Anaxago – two prominent online marketplaces – to raise capital for six different projects. The report states the company is now at risk of bankruptcy placing approximately €2.6 million raised on crowdfunding platforms at risk.

“[WiSeed] has already received from Terlat a reimbursement of €300,000 out of the €560,000 loaned as part of the project Le Passage.”

Lender Linked Finance agrees funding deal with Eiffel (Irish Times), Rated: A

Irish peer-to-peer lender Linked Finance has agreed a deal with Paris-based Eiffel Investment Group that will boost its access to funding as it seeks to become the biggest non-bank lender to SMEs here.

Eiffel has agreed to contribute up to 20 per cent of funding for new loans listed on Linked Finance’s platform.

India

Govt should allocate funds for infrastructure projects in order to sustain demand (India Info Online), Rated: A

India’s economic growth is likely to decelerate by 1% to 6.6% this year as per IMF recent release. Government is therefore expected to allocate funds for infrastructure projects in order to sustain demand during the year 2017.

Hence, we expect government to provide tax exemption upto Rs 1,00,000 on investment in alternative investment sources and make provisions towards adjusting loss / non recoverable debt against the respective head.

The move shall encourage individuals to invest in alternative investment platform namely P2P lending which is a high return, medium risk avenue facilitating better returns for the common men at one end and funding support for SME on the other.

Authors:

George Popescu
Allen Taylor